x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 06-1364380 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ | |||
Emerging growth company | ¨ | |||||
Page | ||
PART I FINANCIAL INFORMATION | ||
ITEM 1: | ||
Consolidated Balance Sheets at November 30, 2018 (unaudited) and February 28, 2018 (derived from audited financial statements) | ||
Consolidated Statements of Operations for the three and nine months ended November 30, 2018 (unaudited) and 2017 (unaudited) | ||
Consolidated Statements of Comprehensive Income for the three and nine months ended November 30, 2018 (unaudited) and 2017 (unaudited) | ||
Consolidated Statements of Cash Flows for the three and nine months ended November 30, 2018 (unaudited) and 2017 (unaudited) | ||
NOTE 1—Company | ||
NOTE 2—Summary of Significant Accounting Policies | ||
NOTE 3—Accounts Receivable | ||
NOTE 4—Identifiable Intangible Assets | ||
NOTE 5—Deferred Selling Costs | ||
NOTE 6—Derivative Instruments | ||
NOTE 7—Income Taxes | ||
NOTE 8—Convertible Notes | ||
NOTE 9—Commitments and Contingencies | ||
NOTE 10—Legal Proceedings | ||
NOTE 11—Stockholders’ Equity | ||
NOTE 12—Deferred Revenue and Performance Obligations | ||
NOTE 13—Earnings Per Share | ||
NOTE 14—Share-based Awards | ||
NOTE 15—Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||
NOTE 16—Segment Reporting | ||
NOTE 17—Business Combinations | ||
ITEM 2: | ||
ITEM 3: | ||
ITEM 4: | ||
PART II OTHER INFORMATION | ||
ITEM 1: | ||
ITEM 1A: | ||
ITEM 2: | ||
ITEM 6: | ||
ITEM 1. | FINANCIAL STATEMENTS |
November 30, 2018 (Unaudited) | February 28, 2018 (1) | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash, cash equivalents and restricted cash | $ | $ | |||||
Investments in debt and equity securities, short-term | |||||||
Accounts receivable, net of allowances for doubtful accounts of $2,805 and $2,167, respectively | |||||||
Prepaid expenses | |||||||
Other current assets | |||||||
Total current assets | |||||||
Property and equipment, net of accumulated depreciation and amortization of $309,697 and $269,429, respectively | |||||||
Goodwill | |||||||
Identifiable intangibles, net | |||||||
Investments in debt securities, long-term | |||||||
Deferred tax assets, net | |||||||
Other assets, net | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | $ | |||||
Deferred revenue, short-term | |||||||
Other current obligations | |||||||
Convertible notes | |||||||
Total current liabilities | |||||||
Deferred revenue, long-term | |||||||
Convertible notes | |||||||
Other long-term obligations | |||||||
Commitments and contingencies (NOTES 9 and 10) | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.0001 per share par value, 5,000,000 shares authorized, none outstanding | |||||||
Common stock, $0.0001 per share par value, 300,000,000 shares authorized, 242,609,945 and 238,688,708 shares issued, and 176,759,725 and 177,073,904 shares outstanding, respectively | |||||||
Additional paid-in capital | |||||||
Retained earnings | |||||||
Treasury stock, at cost, 65,850,220 and 61,614,804 shares, respectively | ( | ) | ( | ) | |||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Total stockholders’ equity | |||||||
Total liabilities and stockholders’ equity | $ | $ | |||||
(1) |
Three Months Ended | Nine Months Ended | ||||||||||||||
November 30, 2018 | November 30, 2017 (1) | November 30, 2018 | November 30, 2017 (1) | ||||||||||||
Revenue: | |||||||||||||||
Subscriptions | $ | $ | $ | $ | |||||||||||
Training and services | |||||||||||||||
Total revenue | |||||||||||||||
Cost of revenue: | |||||||||||||||
Subscriptions | |||||||||||||||
Training and services | |||||||||||||||
Total cost of revenue | |||||||||||||||
Gross profit | |||||||||||||||
Operating expense: | |||||||||||||||
Sales and marketing | |||||||||||||||
Research and development | |||||||||||||||
General and administrative | |||||||||||||||
Total operating expense | |||||||||||||||
Income from operations | |||||||||||||||
Interest income | |||||||||||||||
Interest expense | |||||||||||||||
Other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Income before provision for income taxes | |||||||||||||||
Provision for income taxes | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Net income per share: | |||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||
Diluted | $ | $ | $ | $ | |||||||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | |||||||||||||||
Diluted | |||||||||||||||
(1) |
Three Months Ended | Nine Months Ended | ||||||||||||||
November 30, 2018 | November 30, 2017 (1) | November 30, 2018 | November 30, 2017 (1) | ||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Other comprehensive income (loss): | |||||||||||||||
Change in foreign currency translation adjustment | ( | ) | ( | ) | |||||||||||
Available-for-sale securities: | |||||||||||||||
Unrealized (loss) gain on available-for-sale securities during the period | ( | ) | ( | ) | ( | ) | |||||||||
Reclassification for gain realized on available-for-sale securities, reported in Other expense, net | ( | ) | ( | ) | ( | ) | |||||||||
Tax benefit (expense) | ( | ) | |||||||||||||
Net change in available-for-sale securities (net of tax) | ( | ) | ( | ) | ( | ) | |||||||||
Total other comprehensive income (loss) | ( | ) | ( | ) | |||||||||||
Comprehensive income | $ | $ | $ | $ | |||||||||||
(1) |
Three Months Ended | Nine Months Ended | ||||||||||||||
November 30, 2018 | November 30, 2017 (1) | November 30, 2018 | November 30, 2017 (1) | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | |||||||||||||||
Amortization of debt discount and transaction costs | |||||||||||||||
Repayments of convertible notes attributable to debt discount | ( | ) | ( | ) | |||||||||||
Deferred income taxes | ( | ) | |||||||||||||
Share-based compensation expense | |||||||||||||||
Net amortization of bond premium on debt securities available for sale | |||||||||||||||
Other | ( | ) | |||||||||||||
Changes in operating assets and liabilities, net of effects of acquisitions: | |||||||||||||||
Accounts receivable | ( | ) | ( | ) | |||||||||||
Other receivables | ( | ) | ( | ) | ( | ) | |||||||||
Prepaid expenses | ( | ) | ( | ) | |||||||||||
Accounts payable and accrued expenses | ( | ) | |||||||||||||
Deferred revenue | ( | ) | |||||||||||||
Other | ( | ) | ( | ) | |||||||||||
Net cash provided by operating activities | |||||||||||||||
Cash flows from investing activities: | |||||||||||||||
Purchase of investment in debt securities available for sale | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Proceeds from maturities of investment in debt securities available for sale | |||||||||||||||
Proceeds from sales of investment in debt securities available for sale | |||||||||||||||
Proceeds from sales of strategic equity investments | |||||||||||||||
Acquisition of businesses, net of cash acquired | ( | ) | ( | ) | ( | ) | |||||||||
Purchase of developed software and other intangible assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Purchase of property and equipment | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Other | ( | ) | ( | ) | |||||||||||
Net cash (used in) provided by investing activities | ( | ) | ( | ) | ( | ) | |||||||||
Cash flows from financing activities: | |||||||||||||||
Proceeds from exercise of common stock options | |||||||||||||||
Proceeds from employee stock purchase program | |||||||||||||||
Payments related to net settlement of share-based compensation awards | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Purchase of treasury stock | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Payments on other borrowings | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Repayments of convertible notes attributable to principal | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net cash used in financing activities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash | ( | ) | ( | ) | ( | ) | |||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ) | |||||||||||||
Cash, cash equivalents and restricted cash at beginning of the period | |||||||||||||||
Cash, cash equivalents and restricted cash at end of the period | $ | $ | $ | $ | |||||||||||
Restricted cash included in cash, cash equivalents and restricted cash | $ | $ | $ | $ | |||||||||||
(1) |
February 28, 2018 | |||||||||||
As Reported | Adjustments | As Adjusted | |||||||||
Prepaid expenses | $ | $ | $ | ||||||||
Deferred tax assets, net | $ | $ | ( | ) | $ | ||||||
Other assets, net | $ | $ | $ | ||||||||
Accounts payable and accrued expenses | $ | $ | $ | ||||||||
Retained earnings | $ | $ | $ | ||||||||
Three Months Ended November 30, 2017 | Nine Months Ended November 30, 2017 | ||||||||||||||||||||||
As Reported | Adjustments | As Adjusted | As Reported | Adjustments | As Adjusted | ||||||||||||||||||
Operating expense: | |||||||||||||||||||||||
Sales and marketing | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||
Net income | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Net income per share: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Diluted | $ | $ | $ | $ | $ | $ | |||||||||||||||||
As of | Balance at beginning of period | Charged to (recovery of) expense | Adjustments (1) | Balance at end of period | ||||||||||
February 28, 2018 | $ | ( | ) | $ | ||||||||||
November 30, 2018 | $ | ( | ) | $ | ||||||||||
(1) |
November 30, 2018 | February 28, 2018 | ||||||||||||||||||||||
Gross Amount | Accumulated Amortization | Net Amount | Gross Amount | Accumulated Amortization | Net Amount | ||||||||||||||||||
Trademarks, copyrights and patents | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||
Purchased technologies | ( | ) | ( | ) | |||||||||||||||||||
Customer and reseller relationships | ( | ) | ( | ) | |||||||||||||||||||
Covenants not to compete | ( | ) | ( | ) | |||||||||||||||||||
Other intangible assets | ( | ) | ( | ) | |||||||||||||||||||
Total identifiable intangible assets | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
November 30, 2018 | November 30, 2017 | November 30, 2018 | November 30, 2017 | ||||||||||||
Cost of revenue | $ | $ | $ | $ | |||||||||||
Sales and marketing | |||||||||||||||
Research and development | |||||||||||||||
General and administrative | |||||||||||||||
Total amortization expense | $ | $ | $ | $ | |||||||||||
November 30, 2018 | February 28, 2018 (1) | ||||||
Deferred commissions, current | $ | $ | |||||
Deferred commissions, non-current | |||||||
Total deferred commissions | $ | $ | |||||
(1) |
November 30, 2018 | Classification of Gain (Loss) Recognized in Income on Derivatives | Three Months Ended November 30, 2018 | Nine Months Ended November 30, 2018 | ||||||||||||||||
Balance Sheet Classification | Fair Value | Notional Value | |||||||||||||||||
Assets—foreign currency forward contracts not designated as hedges | Other current assets | $ | $ | Other expense, net | $ | $ | |||||||||||||
Liabilities—foreign currency forward contracts not designated as hedges | Accounts payable and accrued expenses | ( | ) | Other expense, net | ( | ) | ( | ) | |||||||||||
Total | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||
November 30, 2017 | Classification of Gain (Loss) Recognized in Income on Derivatives | Three Months Ended November 30, 2017 | Nine Months Ended November 30, 2017 | ||||||||||||||||
Balance Sheet Classification | Fair Value | Notional Value | |||||||||||||||||
Assets—foreign currency forward contracts not designated as hedges | Other current assets | $ | $ | Other expense, net | $ | $ | |||||||||||||
Liabilities—foreign currency forward contracts not designated as hedges | Accounts payable and accrued expenses | ( | ) | Other expense, net | ( | ) | ( | ) | |||||||||||
Total | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||
(1) |
November 30, 2018 | February 28, 2018 | ||||||
Liability component: | |||||||
Principal | $ | $ | |||||
Less: debt issuance costs | ( | ) | ( | ) | |||
Less: debt discount | ( | ) | ( | ) | |||
Net carrying amount | $ | $ | |||||
Equity component (1) | $ | $ | |||||
__________ | |||||||
(1) Recognized in the Consolidated Balance Sheets in Additional paid-in capital. | |||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
November 30, 2018 | November 30, 2017 | November 30, 2018 | November 30, 2017 | ||||||||||||
Coupon rate 0.25% per year, payable semiannually | $ | $ | $ | $ | |||||||||||
Amortization of convertible note issuance costs — liability component | |||||||||||||||
Accretion of debt discount | |||||||||||||||
Total interest expense related to convertible notes | $ | $ | $ | $ | |||||||||||
November 30, 2018 | |||||||
Fair Value | Carrying Value | ||||||
Convertible notes | $ | $ | |||||
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | |||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance at August 31, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | |||||||||||||||||||||
Vest and exercise of share-based awards | — | — | — | — | ||||||||||||||||||||||
Common stock repurchase | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | |||||||||||||||||||||
Minimum tax withholdings paid by the Company on behalf of employees related to net settlement of employee share-based awards | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||
Re-issuance of treasury stock under employee stock purchase plan | — | — | — | |||||||||||||||||||||||
Convertible note conversions | — | ( | ) | — | — | ( | ) | |||||||||||||||||||
Exercises of convertible note hedges | — | — | — | — | ||||||||||||||||||||||
Balance at November 30, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
Common Stock | Additional Paid-In Capital | Retained Earnings (1) | Treasury Stock | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | |||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance at August 31, 2017 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||
Vest and exercise of share-based awards | — | — | — | — | ||||||||||||||||||||||
Common stock repurchase | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Share-based compensation expense | — | — | — | — | — | |||||||||||||||||||||
Minimum tax withholdings paid by the Company on behalf of employees related to net settlement of employee share-based awards | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||
Re-issuance of treasury stock under employee stock purchase plan | — | — | — | — | ||||||||||||||||||||||
Other adjustments | — | — | — | — | — | |||||||||||||||||||||
Balance at November 30, 2017 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
(1) |
Common Stock | Additional Paid-In Capital | Retained Earnings (1) | Treasury Stock | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | |||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance at February 28, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||
Vest and exercise of share-based awards | — | — | — | — | ||||||||||||||||||||||
Common stock repurchase | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | |||||||||||||||||||||
Minimum tax withholdings paid by the Company on behalf of employees related to net settlement of employee share-based awards | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||
Re-issuance of treasury stock under employee stock purchase plan | — | — | — | — | ||||||||||||||||||||||
Convertible note conversions | — | ( | ) | ( | ) | |||||||||||||||||||||
Exercises of convertible note hedges | — | — | — | ( | ) | — | ||||||||||||||||||||
Cumulative-effect adjustment from adoption of ASU 2016-01 | — | — | — | — | — | |||||||||||||||||||||
Balance at November 30, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
(1) |
Common Stock | Additional Paid-In Capital | Retained Earnings (1) | Treasury Stock | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | |||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance at February 28, 2017 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | |||||||||||||||||||||
Vest and exercise of share-based awards | — | — | — | |||||||||||||||||||||||
Common stock repurchase | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||
Share-based compensation expense | — | — | — | — | — | |||||||||||||||||||||
Minimum tax withholdings paid by the Company on behalf of employees related to net settlement of employee share-based awards | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||
Re-issuance of treasury stock under employee stock purchase plan | — | — | — | — | — | |||||||||||||||||||||
Other adjustments | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||
Balance at November 30, 2017 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
(1) |
November 30, 2018 | February 28, 2018 | |||||||
Accumulated loss from foreign currency translation adjustment | $ | ( | ) | $ | ( | ) | ||
Accumulated unrealized loss, net of tax, on available-for-sale securities | ( | ) | ( | ) | ||||
Accumulated other comprehensive loss | $ | ( | ) | $ | ( | ) | ||
February 28, 2018 | Revenue recognized from opening balance (1) | Deferred revenue, net (2) | November 30, 2018 | |||||||||||||
Deferred revenue, short-term | $ | $ | ( | ) | $ | $ | ||||||||||
Deferred revenue, long-term | ||||||||||||||||
Total deferred revenue | $ | $ | ( | ) | $ | $ | ||||||||||
(1) |
(2) |
Three Months Ended | Nine Months Ended | ||||||||||||||
November 30, 2018 | November 30, 2017 (1) | November 30, 2018 | November 30, 2017 (1) | ||||||||||||
Net income available to common stockholders | $ | $ | $ | $ | |||||||||||
Weighted average common shares outstanding | |||||||||||||||
Incremental shares attributable to assumed vesting or exercise of outstanding equity award shares | |||||||||||||||
Dilutive effect of convertible notes | |||||||||||||||
Dilutive effect of warrants | |||||||||||||||
Diluted shares | |||||||||||||||
Diluted net income per share | $ | $ | $ | $ | |||||||||||
(1) |
Three Months Ended | Nine Months Ended | ||||||||||
November 30, 2018 | November 30, 2017 | November 30, 2018 | November 30, 2017 | ||||||||
Number of shares considered anti-dilutive for calculating diluted EPS | |||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
November 30, 2018 | November 30, 2017 | November 30, 2018 | November 30, 2017 | ||||||||||||
Cost of revenue | $ | $ | $ | $ | |||||||||||
Sales and marketing | |||||||||||||||
Research and development | |||||||||||||||
General and administrative | |||||||||||||||
Total share-based compensation expense (1) | $ | $ | $ | $ | |||||||||||
(1) |
Three Months Ended | |||||||||||||
November 30, 2018 | November 30, 2017 | ||||||||||||
Shares and Shares Underlying Awards | Weighted Average Per Share Award Fair Value | Shares and Shares Underlying Awards | Weighted Average Per Share Award Fair Value | ||||||||||
Service-based shares and share units | $ | $ | |||||||||||
Nine Months Ended | |||||||||||||
November 30, 2018 | November 30, 2017 | ||||||||||||
Shares and Shares Underlying Awards | Weighted Average Per Share Award Fair Value | Shares and Shares Underlying Awards | Weighted Average Per Share Award Fair Value | ||||||||||
Service-based shares and share units | $ | $ | |||||||||||
Performance share units—target | (1) | $ | $ | ||||||||||
Performance share awards | (2) | $ | $ | ||||||||||
Total share-based awards | $ | $ | |||||||||||
(1) | Certain executives and senior management were awarded a target number of performance share units (“PSUs”). PSU grantees may earn up to |
(2) |
November 30, 2018 | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | |||||||||||||||
Money markets (1) | $ | $ | $ | $ | |||||||||||
Interest-bearing deposits (1) | |||||||||||||||
Available-for-sale securities (1): | |||||||||||||||
Commercial paper | |||||||||||||||
U.S. agency securities | |||||||||||||||
Corporate securities | |||||||||||||||
Foreign currency derivatives (2) | |||||||||||||||
Liabilities: | |||||||||||||||
Foreign currency derivatives (3) | ( | ) | ( | ) | |||||||||||
Total | $ | $ | $ | $ | |||||||||||
(1) | Included in Cash, cash equivalents and restricted cash, Investments in debt and equity securities, short-term or Investments in debt securities, long-term in the Company’s Consolidated Balance Sheet at November 30, 2018, in addition to $ |
(2) | Included in Other current assets in the Company’s Consolidated Balance Sheet at November 30, 2018. |
(3) | Included in Accounts payable and accrued expenses in the Company’s Consolidated Balance Sheet at November 30, 2018. |
February 28, 2018 | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | |||||||||||||||
Money markets (1) | $ | $ | $ | $ | |||||||||||
Interest-bearing deposits (1) | |||||||||||||||
Available-for-sale securities (1): | |||||||||||||||
Commercial paper | |||||||||||||||
U.S. agency securities | |||||||||||||||
Corporate securities | |||||||||||||||
Equity securities | |||||||||||||||
Foreign currency derivatives (2) | |||||||||||||||
Liabilities: | |||||||||||||||
Foreign currency derivatives (3) | ( | ) | ( | ) | |||||||||||
Total | $ | $ | $ | $ | |||||||||||
(1) |
(2) |
(3) |
Balance Sheet Classification | |||||||||||||||||||||||||||
Amortized Cost | Gross Unrealized | Aggregate Fair Value | Cash Equivalent Marketable Securities | Investments in debt and equity securities, short-term | Investments in debt securities, long-term | ||||||||||||||||||||||
Gains | Losses (1) | ||||||||||||||||||||||||||
Money markets | $ | $ | — | $ | — | $ | $ | $ | — | $ | — | ||||||||||||||||
Interest-bearing deposits | — | — | — | — | |||||||||||||||||||||||
Commercial paper | — | — | — | ||||||||||||||||||||||||
U.S. agency securities | ( | ) | — | ||||||||||||||||||||||||
Corporate securities | ( | ) | — | ||||||||||||||||||||||||
Total | $ | $ | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||
(1) |
As of November 30, 2018 | Less than 1 Year | 1-5 Years | More than 5 Years | ||||||||||||
Maturity of available-for-sale debt securities | $ | $ | $ | $ | |||||||||||
Balance Sheet Classification | |||||||||||||||||||||||||||
Amortized Cost | Gross Unrealized | Aggregate Fair Value | Cash Equivalent Marketable Securities | Investments in debt and equity securities, short-term | Investments in debt securities, long-term | ||||||||||||||||||||||
Gains | Losses (1) | ||||||||||||||||||||||||||
Money markets | $ | $ | — | $ | — | $ | $ | $ | — | $ | — | ||||||||||||||||
Interest-bearing deposits | — | ||||||||||||||||||||||||||
Commercial paper | — | — | — | ||||||||||||||||||||||||
U.S. agency securities | ( | ) | — | ||||||||||||||||||||||||
Corporate securities | ( | ) | |||||||||||||||||||||||||
Equity securities | — | ||||||||||||||||||||||||||
Total | $ | $ | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||
(1) |
Americas | EMEA | Asia Pacific | Corporate (1) | Consolidated | |||||||||||||||
Three Months Ended November 30, 2018 | |||||||||||||||||||
Revenue from unaffiliated customers | $ | $ | $ | $ | $ | ||||||||||||||
Income (loss) from operations | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Three Months Ended November 30, 2017 | |||||||||||||||||||
Revenue from unaffiliated customers | $ | $ | $ | $ | $ | ||||||||||||||
Income (loss) from operations (2) | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Nine Months Ended November 30, 2018 | |||||||||||||||||||
Revenue from unaffiliated customers | $ | $ | $ | $ | $ | ||||||||||||||
Income (loss) from operations | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Total cash, cash equivalents, restricted cash and available-for-sale investment securities | $ | $ | $ | $ | $ | ||||||||||||||
Total assets | $ | $ | $ | $ | $ | ||||||||||||||
Nine Months Ended November 30, 2017 | |||||||||||||||||||
Revenue from unaffiliated customers | $ | $ | $ | $ | $ | ||||||||||||||
Income (loss) from operations (2) | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Total cash, cash equivalents, restricted cash and available-for-sale investment securities | $ | $ | $ | $ | $ | ||||||||||||||
Total assets (2) | $ | $ | $ | $ | $ | ||||||||||||||
(1) |
(2) |
Three Months Ended | Nine Months Ended | ||||||||||||||
November 30, 2018 | November 30, 2017 | November 30, 2018 | November 30, 2017 | ||||||||||||
U.S., the Company’s country of domicile | $ | $ | $ | $ | |||||||||||
Foreign | |||||||||||||||
Total revenue from unaffiliated customers | $ | $ | $ | $ | |||||||||||
November 30, 2018 | February 28, 2018 | ||||||
U.S., the Company’s country of domicile | $ | $ | |||||
Foreign | |||||||
Total tangible long-lived assets | $ | $ | |||||
Three Months Ended | Nine Months Ended | ||||||||||||||
November 30, 2018 | November 30, 2017 | November 30, 2018 | November 30, 2017 | ||||||||||||
Subscription revenue: | |||||||||||||||
Infrastructure-related offerings | $ | $ | $ | $ | |||||||||||
Application Development-related and other emerging technology offerings | |||||||||||||||
Total subscription revenue | |||||||||||||||
Training and services revenue: | |||||||||||||||
Consulting services | |||||||||||||||
Training | |||||||||||||||
Total training and services revenue | |||||||||||||||
Total revenue | $ | $ | $ | $ | |||||||||||
Three Months Ended November 30, 2017 | Nine Months Ended November 30, 2017 | ||||||
Revenue | $ | $ | |||||
Net income | $ | $ | |||||
Basic net income per common share | $ | $ | |||||
Diluted net income per common share | $ | $ | |||||
Balance at February 28, 2018 | $ | ||
Acquisitions | |||
Impact of foreign currency fluctuations | ( | ) | |
Other adjustments | ( | ) | |
Balance at November 30, 2018 | $ | ||
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Three Months Ended | Nine Months Ended | ||||||||||||||||||
November 30, 2018 | November 30, 2017 | Year-Over-Year Growth Rate | November 30, 2018 | November 30, 2017 | Year-Over-Year Growth Rate | ||||||||||||||
Infrastructure-related subscription revenue, as reported | $ | 534,051 | $ | 494,974 | 7.9% | $ | 1,583,154 | $ | 1,440,383 | 9.9% | |||||||||
Adjustment for foreign currency exchange rates | 7,479 | — | (5,212 | ) | — | ||||||||||||||
Infrastructure-related subscription revenue, excluding foreign currency impact | 541,530 | 494,974 | 9.4% | 1,577,942 | 1,440,383 | 9.6% | |||||||||||||
Application Development-related and other emerging technology subscription revenue, as reported | 206,610 | 161,858 | 27.6% | 591,727 | 450,519 | 31.3% | |||||||||||||
Adjustment for foreign currency exchange rates | 4,340 | — | (890 | ) | — | ||||||||||||||
Application Development-related and other emerging technology subscription revenue, excluding foreign currency impact | 210,950 | 161,858 | 30.3% | 590,837 | 450,519 | 31.1% | |||||||||||||
Total subscription revenue, as reported | 740,661 | 656,832 | 12.8% | 2,174,881 | 1,890,902 | 15.0% | |||||||||||||
Adjustment for foreign currency exchange rates | 11,819 | — | (6,102 | ) | — | ||||||||||||||
Total subscription revenue, excluding foreign currency impact | 752,480 | 656,832 | 14.6% | 2,168,779 | 1,890,902 | 14.7% | |||||||||||||
Total training and services revenue, as reported | 106,134 | 91,146 | 16.4% | 308,191 | 257,227 | 19.8% | |||||||||||||
Adjustment for foreign currency exchange rates | 3,668 | — | 2,696 | — | |||||||||||||||
Total training and services revenue, excluding foreign currency impact | 109,802 | 91,146 | 20.5% | 310,887 | 257,227 | 20.9% | |||||||||||||
Total revenue, as reported | 846,795 | 747,978 | 13.2% | 2,483,072 | 2,148,129 | 15.6% | |||||||||||||
Adjustment for foreign currency exchange rates | 15,487 | — | (3,406 | ) | — | ||||||||||||||
Total revenue, excluding foreign currency impact | $ | 862,282 | $ | 747,978 | 15.3% | $ | 2,479,666 | $ | 2,148,129 | 15.4% | |||||||||
November 30, 2018 | February 28, 2018 | Year-to-Date Growth Rate | |||||||
Current deferred revenue, as reported | $ | 1,738,547 | $ | 1,853,719 | (6.2)% | ||||
Adjustment for foreign currency exchange rates | 51,265 | — | |||||||
Current deferred revenue, excluding foreign currency impact | $ | 1,789,812 | $ | 1,853,719 | (3.4)% | ||||
Long-term deferred revenue, as reported | $ | 790,577 | $ | 741,453 | 6.6% | ||||
Adjustment for foreign currency exchange rates | 29,516 | — | |||||||
Long-term deferred revenue, excluding foreign currency impact | $ | 820,093 | $ | 741,453 | 10.6% | ||||
Total deferred revenue, as reported | $ | 2,529,124 | $ | 2,595,172 | (2.5)% | ||||
Adjustment for foreign currency exchange rates | 80,781 | — | |||||||
Total deferred revenue, excluding foreign currency impact | $ | 2,609,905 | $ | 2,595,172 | 0.6% | ||||
November 30, 2018 | November 30, 2017 | Year-Over-Year Growth Rate | |||||||
Current deferred revenue, as reported | $ | 1,738,547 | $ | 1,482,428 | 17.3% | ||||
Adjustment for foreign currency exchange rates | 32,776 | — | |||||||
Current deferred revenue, excluding foreign currency impact | $ | 1,771,323 | $ | 1,482,428 | 19.5% | ||||
Long-term deferred revenue, as reported | $ | 790,577 | $ | 623,150 | 26.9% | ||||
Adjustment for foreign currency exchange rates | 20,444 | — | |||||||
Long-term deferred revenue, excluding foreign currency impact | $ | 811,021 | $ | 623,150 | 30.1% | ||||
Total deferred revenue, as reported | $ | 2,529,124 | $ | 2,105,578 | 20.1% | ||||
Adjustment for foreign currency exchange rates | 53,220 | — | |||||||
Total deferred revenue, excluding foreign currency impact | $ | 2,582,344 | $ | 2,105,578 | 22.6% | ||||
Three Months Ended | |||||||||
November 30, 2018 | November 30, 2017 | Year-Over-Year Growth Rate | |||||||
Revenue, as reported | $ | 846,795 | $ | 747,978 | 13.2% | ||||
Change in deferred revenue, as reported on Statements of Cash Flows | 153,111 | 57,275 | |||||||
Billings proxy | 999,906 | 805,253 | 24.2% | ||||||
Adjustment to revenue for foreign currency exchange rates | 15,487 | — | |||||||
Billings proxy, excluding foreign currency impact | $ | 1,015,393 | $ | 805,253 | 26.1% | ||||
Four-Fiscal-Quarter Period Ended | |||||||||
November 30, 2018 | November 30, 2017 | Year-Over-Year Growth Rate | |||||||
Four-fiscal-quarter period rolling average billings proxy | $ | 932,834 | $ | 776,338 | 20.2% | ||||
Adjustment to revenue for foreign currency exchange rates | (7,521 | ) | — | ||||||
Four-fiscal-quarter period rolling average billings proxy, excluding foreign currency impact | $ | 925,313 | $ | 776,338 | 19.2% | ||||
Americas | EMEA | Asia Pacific | Consolidated | |||||||||||||||||||||
Three Months Ended | Revenue | YoY Growth % | Revenue | YoY Growth % | Revenue | YoY Growth % | Revenue | YoY Growth % | ||||||||||||||||
November 30, 2018, as reported | $ | 527,367 | 11.8% | $ | 198,730 | 14.4% | $ | 120,698 | 17.8% | $ | 846,795 | 13.2% | ||||||||||||
Adjustment for foreign currency exchange rates | 6,194 | 5,354 | 3,939 | 15,487 | ||||||||||||||||||||
November 30, 2018, excluding foreign currency impact | $ | 533,561 | 13.1% | $ | 204,084 | 17.5% | $ | 124,637 | 21.6% | $ | 862,282 | 15.3% | ||||||||||||
November 30, 2017, as reported | $ | 471,773 | 19.9% | $ | 173,718 | 31.0% | $ | 102,487 | 15.0% | $ | 747,978 | 21.6% | ||||||||||||
Americas | EMEA | Asia Pacific | Consolidated (1) | ||||
Three Months Ended November 30, 2018 | 86.2% | 86.8% | 83.0% | 85.3% | |||
Three Months Ended November 30, 2017 | 85.7% | 87.4% | 82.5% | 85.1% | |||
(1) | Consolidated gross profit includes corporate (non-allocated) share-based compensation expense for the three months ended November 30, 2018 and November 30, 2017 of $4.8 million and $4.2 million, respectively. Share-based compensation expense was not allocated to geographic segments. For additional information, see NOTE 14—Share-based Awards to our Consolidated Financial Statements. |
Americas | EMEA | Asia Pacific | Consolidated (1) | ||||
Three Months Ended November 30, 2018 | 15.8% | 22.8% | 30.4% | 12.9% | |||
Three Months Ended November 30, 2017 (2) | 21.2% | 24.4% | 28.0% | 15.9% | |||
(1) | Consolidated operating income includes corporate (non-allocated) share-based compensation expense for the three months ended November 30, 2018 and November 30, 2017 of $56.3 million and $52.3 million, respectively. Share-based compensation expense was not allocated to geographic segments. For additional information, see NOTE 14—Share-based Awards to our Consolidated Financial Statements. |
(2) | As adjusted to reflect the impact of the retrospective application of ASC 606. See Note 2—Summary of Significant Accounting Policies to our Consolidated Financial Statements for detailed information on adoption of ASC606. |
• | Revenue recognition; |
• | Goodwill and other long-lived assets; |
• | Share-based compensation; |
• | Income taxes; and |
• | Loss contingencies. |
Three Months Ended (Unaudited) | ||||||||||||||
November 30, 2018 | November 30, 2017 (1) | $ Change | % Change | |||||||||||
Revenue: | ||||||||||||||
Subscriptions | $ | 740,661 | $ | 656,832 | $ | 83,829 | 12.8 | % | ||||||
Training and services | 106,134 | 91,146 | 14,988 | 16.4 | ||||||||||
Total revenue | 846,795 | 747,978 | 98,817 | 13.2 | ||||||||||
Cost of revenue: | ||||||||||||||
Subscriptions | 53,441 | 47,277 | 6,164 | 13.0 | ||||||||||
As a % of subscription revenue | 7.2 | % | 7.2 | % | ||||||||||
Training and services | 70,676 | 64,482 | 6,194 | 9.6 | ||||||||||
As a % of training and services revenue | 66.6 | % | 70.7 | % | ||||||||||
Total cost of revenue | 124,117 | 111,759 | 12,358 | 11.1 | ||||||||||
As a % of total revenue | 14.7 | % | 14.9 | % | ||||||||||
Gross profit | 722,678 | 636,219 | 86,459 | 13.6 | ||||||||||
Operating expense: | ||||||||||||||
Sales and marketing | 353,592 | 308,083 | 45,509 | 14.8 | ||||||||||
Research and development | 164,267 | 145,580 | 18,687 | 12.8 | ||||||||||
General and administrative | 95,861 | 63,838 | 32,023 | 50.2 | ||||||||||
Total operating expense | 613,720 | 517,501 | 96,219 | 18.6 | ||||||||||
Income from operations | 108,958 | 118,718 | (9,760 | ) | (8.2 | ) | ||||||||
Interest income | 7,334 | 4,864 | 2,470 | 50.8 | ||||||||||
Interest expense | 4,299 | 6,180 | (1,881 | ) | (30.4 | ) | ||||||||
Other expense, net | (464 | ) | (1,187 | ) | 723 | 60.9 | ||||||||
Income before provision for income taxes | 111,529 | 116,215 | (4,686 | ) | (4.0 | ) | ||||||||
Provision for income taxes | 17,079 | 14,606 | 2,473 | 16.9 | ||||||||||
Net income | $ | 94,450 | $ | 101,609 | $ | (7,159 | ) | (7.0 | )% | |||||
Gross profit margin—subscriptions | 92.8 | % | 92.8 | % | ||||||||||
Gross profit margin—training and services | 33.4 | % | 29.3 | % | ||||||||||
Gross profit margin | 85.3 | % | 85.1 | % | ||||||||||
As a % of total revenue: | ||||||||||||||
Subscription revenue | 87.5 | % | 87.8 | % | ||||||||||
Training and services revenue | 12.5 | % | 12.2 | % | ||||||||||
Sales and marketing expense | 41.8 | % | 41.2 | % | ||||||||||
Research and development expense | 19.4 | % | 19.5 | % | ||||||||||
General and administrative expense | 11.3 | % | 8.5 | % | ||||||||||
Total operating expenses | 72.5 | % | 69.2 | % | ||||||||||
Income from operations | 12.9 | % | 15.9 | % | ||||||||||
Income before provision for income taxes | 13.2 | % | 15.5 | % | ||||||||||
Net income | 11.2 | % | 13.6 | % | ||||||||||
Effective income tax rate (2) | 15.3 | % | 12.6 | % | ||||||||||
(1) | As adjusted to reflect the impact of the retrospective application of ASC 606. See Note 2—Summary of Significant Accounting Policies to our Consolidated Financial Statements for detailed information on adoption of ASC 606. |
(2) | See NOTE 7—Income Taxes to our Consolidated Financial Statements for further discussion. |
Nine Months Ended (Unaudited) | ||||||||||||||
November 30, 2018 | November 30, 2017 (1) | $ Change | % Change | |||||||||||
Revenue: | ||||||||||||||
Subscriptions | $ | 2,174,881 | $ | 1,890,902 | $ | 283,979 | 15.0 | % | ||||||
Training and services | 308,191 | 257,227 | 50,964 | 19.8 | ||||||||||
Total revenue | 2,483,072 | 2,148,129 | 334,943 | 15.6 | ||||||||||
Cost of revenue: | ||||||||||||||
Subscriptions | 157,545 | 137,234 | 20,311 | 14.8 | ||||||||||
As a % of subscription revenue | 7.2 | % | 7.3 | % | ||||||||||
Training and services | 208,201 | 181,938 | 26,263 | 14.4 | ||||||||||
As a % of training and services revenue | 67.6 | % | 70.7 | % | ||||||||||
Total cost of revenue | 365,746 | 319,172 | 46,574 | 14.6 | ||||||||||
As a % of total revenue | 14.7 | % | 14.9 | % | ||||||||||
Gross profit | 2,117,326 | 1,828,957 | 288,369 | 15.8 | ||||||||||
Operating expense: | ||||||||||||||
Sales and marketing | 1,036,787 | 880,723 | 156,064 | 17.7 | ||||||||||
Research and development | 497,081 | 424,552 | 72,529 | 17.1 | ||||||||||
General and administrative | 227,788 | 180,430 | 47,358 | 26.2 | ||||||||||
Total operating expense | 1,761,656 | 1,485,705 | 275,951 | 18.6 | ||||||||||
Income from operations | 355,670 | 343,252 | 12,418 | 3.6 | ||||||||||
Interest income | 23,023 | 13,469 | 9,554 | 70.9 | ||||||||||
Interest expense | 15,426 | 18,346 | (2,920 | ) | (15.9 | ) | ||||||||
Other expense, net | (5,115 | ) | (3,033 | ) | (2,082 | ) | (68.6 | ) | ||||||
Income before provision for income taxes | 358,152 | 335,342 | 22,810 | 6.8 | ||||||||||
Provision for income taxes | 63,658 | 61,331 | 2,327 | 3.8 | ||||||||||
Net income | $ | 294,494 | $ | 274,011 | $ | 20,483 | 7.5 | % | ||||||
Gross profit margin—subscriptions | 92.8 | % | 92.7 | % | ||||||||||
Gross profit margin—training and services | 32.4 | % | 29.3 | % | ||||||||||
Gross profit margin | 85.3 | % | 85.1 | % | ||||||||||
As a % of total revenue: | ||||||||||||||
Subscription revenue | 87.6 | % | 88.0 | % | ||||||||||
Training and services revenue | 12.4 | % | 12.0 | % | ||||||||||
Sales and marketing expense | 41.8 | % | 41.0 | % | ||||||||||
Research and development expense | 20.0 | % | 19.8 | % | ||||||||||
General and administrative expense | 9.2 | % | 8.4 | % | ||||||||||
Total operating expenses | 70.9 | % | 69.2 | % | ||||||||||
Income from operations | 14.3 | % | 16.0 | % | ||||||||||
Income before provision for income taxes | 14.4 | % | 15.6 | % | ||||||||||
Net income | 11.9 | % | 12.8 | % | ||||||||||
Effective income tax rate (2) | 17.8 | % | 18.3 | % | ||||||||||
(1) | As adjusted to reflect the impact of the retrospective application of ASC 606. See Note 2—Summary of Significant Accounting Policies to our Consolidated Financial Statements for detailed information on adoption of ASC 606. |
(2) | See NOTE 7—Income Taxes to our Consolidated Financial Statements for further discussion. |
• | funding the continued development of our technology offerings; |
• | improving and extending our services and the technologies used to market and deliver these services to our customers and support our business; |
• | pursuing strategic acquisitions and alliances; |
• | investing in or acquiring businesses, products and technologies; and |
• | investing in enhancements to the systems we use to run our business and the expansion of our office facilities. |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
• | integrating the acquired business’ accounting, financial reporting, management, information and information security, human resource and other administrative systems to permit effective management and reporting, and the lack of control if such integration is delayed or not implemented; |
• | incorporating and further developing acquired products or technology into our offerings and maintaining quality standards consistent with our brands; |
• | effectively evaluating talent at an acquired business or identifying cultural challenges associated with integrating employees from the acquired business into our organization; |
• | losing key employees of the acquired business; |
• | achieving the expected benefits of the transaction, which may include generating greater market acceptance of our offerings and technologies, increasing our revenue or integrating the assets acquired into one or more of our current offerings; |
• | increasing or adding operating expenses related to the acquired business or technology; |
• | identifying acquisition targets that complement our strategic direction and technology road map; |
• | gathering full information regarding a business or technology prior to a transaction, including the identification and assessment of liabilities, claims or other circumstances that could result in litigation or regulatory exposure, unfavorable accounting treatment, unexpected tax implications and other adverse effects on our business; |
• | maintaining or establishing acceptable standards, controls, procedures and policies; |
• | disrupting our ongoing business and distracting management; |
• | impairing relationships with our employees, partners or customers as a result of any integration of new management and other personnel, products or technology or as a result of the changes in the competitive landscape affected by the transaction; |
• | maintaining good relationships with customers or business partners of the acquired business; |
• | incurring expenses related to the transaction; |
• | assuming claims and liabilities from the acquired business or technology, or that are otherwise related to the transaction; |
• | entering into new markets in which we have little or no experience or in which competitors may have stronger market positions; |
• | impairing of intangible assets and goodwill acquired in transactions; and |
• | for foreign transactions, managing additional risks related to the integration of operations across different cultures and languages, and the economic, political, compliance and regulatory risks associated with specific countries. |
• | fluctuations in exchange rates; |
• | pricing environments; |
• | longer payment cycles and less financial stability of customers; |
• | economic, political, compliance and regulatory risks associated with specific countries; |
• | laws and policies of the U.S. and other jurisdictions affecting trade, foreign investment, loans, immigration and taxes, including any adverse effects that may result from the United Kingdom’s vote to exit the European Union; |
• | difficulty selecting and monitoring channel partners; |
• | differing technology standards and customer requirements; |
• | lower levels of availability or use of the Internet, through which our software is often delivered; |
• | difficulty protecting our intellectual property rights globally due to, among other reasons, the uncertainty of laws and enforcement in certain countries relating to the protection of intellectual property rights; |
• | difficulty in staffing, developing and managing foreign operations as a result of distance and language, legal, cultural and other differences; |
• | different employee/employer relationships and the existence of works councils and labor unions; |
• | difficulty maintaining quality standards consistent with our brands; |
• | export and import laws and regulations that could prevent us from delivering our offerings into and from certain countries; |
• | public health risks and natural disasters, particularly in areas in which we have significant operations; |
• | limitations on the repatriation and investment of funds and foreign currency exchange restrictions; |
• | changes in import/export duties, quotas or other trade barriers that could affect the competitive pricing of our offerings and reduce our market share in some countries; and |
• | economic or political instability or terrorist acts in some international markets that could adversely affect our business in those markets or result in the loss or forfeiture of some foreign assets and the loss of sums spent developing and marketing those assets and the revenue associated with them. |
• | competitive products and pricing; |
• | failure to release new or enhanced versions of Red Hat Enterprise Linux on a timely basis, or at all; |
• | maturity of the market for Red Hat Enterprise Linux; |
• | technological change that we are unable to address with Red Hat Enterprise Linux; or |
• | future economic conditions. |
• | our Board of Directors has the right to elect directors to fill a vacancy created by the expansion of the Board of Directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board of Directors; |
• | stockholders must provide advance notice to nominate individuals for election to the Board of Directors or to propose matters that can be acted upon at a stockholders’ meeting; such provisions may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company; and |
• | our Board of Directors may issue, without stockholder approval, shares of undesignated preferred stock; the ability to issue undesignated preferred stock makes it possible for our Board of Directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us. |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Period | Total Number of Shares Purchased (1)(2) | Weighted Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (3) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | |||||||||
September 1, 2018—September 30, 2018 | 56,454 | $ | 113.64 | 36,000 | $ | 745.1 | million | ||||||
October 1, 2018—October 31, 2018 | 326,576 | $ | 125.89 | 58,207 | $ | 737.2 | million | ||||||
November 1, 2018—November 30, 2018 | 1,744 | $ | 73.41 | $ | 737.2 | million | |||||||
Total | 384,774 | 94,207 | |||||||||||
(1) | During the three months ended November 30, 2018, the Company withheld an aggregate of 260,318 shares of its common stock (with a weighted average share price of $125.41) from employees to satisfy minimum tax withholding obligations relating to the vesting of restricted share awards. These shares were not withheld pursuant to the programs described in Note (3) below. |
(2) | In connection with the convertible note conversions settled during the three months ended November 30, 2018, the Company exercised a portion of the options that are part of the convertible note hedge transactions and acquired 30,249 shares of its common stock. The counterparties to the convertible note hedge transactions may be deemed to be an “affiliate purchaser” and may have purchased the shares of the Company’s common stock deliverable to the Company upon the exercise of the options. |
(3) | On June 21, 2018, the Company announced that its Board authorized the repurchase of up to $1.0 billion of Red Hat’s common stock from time to time on the open market or in privately negotiated transactions. The program, which replaced a previous repurchase program, commenced on July 1, 2018, and will expire on the earlier of (i) June 30, 2020 or (ii) a determination by the Board, Chief Executive Officer or Chief Financial Officer to discontinue the program. |
ITEM 6. | EXHIBITS |
Incorporated by Reference | |||||||
Exhibit No. | Exhibit Description | Provided Herewith | Form | File No. | Exhibit | Filing Date | |
2.1 | 8-K | 001-33162 | 2.1 | 10-29-18 | |||
10.1+ | 8-K | 001-33162 | 99.2 | 9-20-18 | |||
31.1 | X | ||||||
31.2 | X | ||||||
32.1 | X | ||||||
101.INS | XBRL Instance Document | X | |||||
101.SCH | XBRL Taxonomy Extension Schema | X | |||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | X | |||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | X | |||||
101.LAB | XBRL Taxonomy Extension Label Linkbase | X | |||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | X | |||||
* | Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplementally copies of any of the omitted schedules upon request by the SEC. |
+ | Indicates a management contract or compensatory plan, contract or arrangement. |
RED HAT, INC. | ||||
Date: | January 4, 2019 | By: | /S/ JAMES M. WHITEHURST | |
James M. Whitehurst President and Chief Executive Officer (Duly Authorized Officer on Behalf of the Registrant) | ||||
RED HAT, INC. | ||||
Date: | January 4, 2019 | By: | /S/ ERIC R. SHANDER | |
Eric R. Shander Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | ||||
By: | /S/ JAMES M. WHITEHURST | |||||
James M. Whitehurst President and Chief Executive Officer (Principal Executive Officer) | ||||||
By: | /S/ ERIC R. SHANDER | |||||
Eric R. Shander Executive Vice President and Chief Financial Officer (Principal Financial Officer) | ||||||
By: | /S/ JAMES M. WHITEHURST | |||||
James M. Whitehurst President and Chief Executive Officer (Principal Executive Officer) | ||||||
By: | /S/ ERIC R. SHANDER | |||||
Eric R. Shander Executive Vice President and Chief Financial Officer (Principal Financial Officer) | ||||||
Document and Entity Information - shares |
9 Months Ended | |
|---|---|---|
Nov. 30, 2018 |
Jan. 02, 2019 |
|
| Document And Entity Information [Abstract] | ||
| Entity Registrant Name | RED HAT INC | |
| Entity Central Index Key | 0001087423 | |
| Current Fiscal Year End Date | --02-28 | |
| Entity Filer Category | Large Accelerated Filer | |
| Document Type | 10-Q | |
| Document Period End Date | Nov. 30, 2018 | |
| Document Fiscal Year Focus | 2019 | |
| Document Fiscal Period Focus | Q3 | |
| Amendment Flag | false | |
| Entity Small Business | false | |
| Entity Emerging Growth Company | false | |
| Entity Common Stock, Shares Outstanding | 176,760,468 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Nov. 30, 2018 |
Feb. 28, 2018 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Accounts receivable, allowances for doubtful accounts | $ 2,805 | $ 2,167 |
| Property and equipment, accumulated depreciation and amortization | $ 309,697 | $ 269,429 |
| Preferred stock, per share par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
| Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
| Preferred stock, outstanding (in shares) | 0 | 0 |
| Common stock, per share par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
| Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
| Common stock, shares issued (in shares) | 242,609,945 | 238,688,708 |
| Common stock, shares outstanding (in shares) | 176,759,725 | 177,073,904 |
| Treasury stock, shares (in shares) | 65,850,220 | 61,614,804 |
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
[1] | Nov. 30, 2018 |
Nov. 30, 2017 |
[1] | |||||||||||
| Revenue: | ||||||||||||||||
| Total revenue | $ 846,795 | $ 747,978 | $ 2,483,072 | $ 2,148,129 | ||||||||||||
| Cost of revenue: | ||||||||||||||||
| Total cost of revenue | 124,117 | 111,759 | 365,746 | 319,172 | ||||||||||||
| Gross profit | 722,678 | 636,219 | 2,117,326 | 1,828,957 | ||||||||||||
| Operating expense: | ||||||||||||||||
| Sales and marketing | 353,592 | 308,083 | 1,036,787 | 880,723 | ||||||||||||
| Research and development | 164,267 | 145,580 | 497,081 | 424,552 | ||||||||||||
| General and administrative | 95,861 | 63,838 | 227,788 | 180,430 | ||||||||||||
| Total operating expense | 613,720 | 517,501 | 1,761,656 | 1,485,705 | ||||||||||||
| Income from operations | 108,958 | 118,718 | [2] | 355,670 | 343,252 | [2] | ||||||||||
| Interest income | 7,334 | 4,864 | 23,023 | 13,469 | ||||||||||||
| Interest expense | 4,299 | 6,180 | 15,426 | 18,346 | ||||||||||||
| Other expense, net | (464) | (1,187) | (5,115) | (3,033) | ||||||||||||
| Income before provision for income taxes | 111,529 | 116,215 | 358,152 | 335,342 | ||||||||||||
| Provision for income taxes | 17,079 | 14,606 | 63,658 | 61,331 | ||||||||||||
| Net income | $ 94,450 | $ 101,609 | [3],[4],[5] | $ 294,494 | $ 274,011 | [3],[4],[5] | ||||||||||
| Net income per share: | ||||||||||||||||
| Basic (in dollars per share) | $ 0.54 | $ 0.57 | $ 1.67 | $ 1.55 | ||||||||||||
| Diluted (in dollars per share) | $ 0.51 | $ 0.55 | [3] | $ 1.57 | $ 1.49 | [3] | ||||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic (in shares) | 176,231 | 177,063 | [3] | 176,762 | 177,188 | [3] | ||||||||||
| Diluted (in shares) | 186,062 | 186,160 | [3] | 187,501 | 183,397 | [3] | ||||||||||
| Subscriptions | ||||||||||||||||
| Revenue: | ||||||||||||||||
| Total revenue | $ 740,661 | $ 656,832 | $ 2,174,881 | $ 1,890,902 | ||||||||||||
| Cost of revenue: | ||||||||||||||||
| Total cost of revenue | 53,441 | 47,277 | 157,545 | 137,234 | ||||||||||||
| Training and services | ||||||||||||||||
| Revenue: | ||||||||||||||||
| Total revenue | 106,134 | 91,146 | 308,191 | 257,227 | ||||||||||||
| Cost of revenue: | ||||||||||||||||
| Total cost of revenue | $ 70,676 | $ 64,482 | $ 208,201 | $ 181,938 | ||||||||||||
| ||||||||||||||||
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
[4] | Nov. 30, 2018 |
Nov. 30, 2017 |
[4] | |||||||||
| Statement of Comprehensive Income [Abstract] | ||||||||||||||
| Net income | $ 94,450 | $ 101,609 | [1],[2],[3] | $ 294,494 | $ 274,011 | [1],[2],[3] | ||||||||
| Other comprehensive income (loss): | ||||||||||||||
| Change in foreign currency translation adjustment | 4,724 | (1,371) | (14,566) | 53,160 | ||||||||||
| Available-for-sale securities: | ||||||||||||||
| Unrealized (loss) gain on available-for-sale securities during the period | (267) | (2,206) | 187 | (1,052) | ||||||||||
| Reclassification for gain realized on available-for-sale securities, reported in Other expense, net | 0 | (1) | (125) | (1) | ||||||||||
| Tax benefit (expense) | 42 | 859 | (37) | 350 | ||||||||||
| Net change in available-for-sale securities (net of tax) | (225) | (1,348) | 25 | (703) | ||||||||||
| Total other comprehensive income (loss) | 4,499 | (2,719) | (14,541) | 52,457 | ||||||||||
| Comprehensive income | $ 98,949 | $ 98,890 | $ 279,953 | $ 326,468 | ||||||||||
| ||||||||||||||
Consolidated Statements of Cash Flows - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
[3] | Nov. 30, 2018 |
Nov. 30, 2017 |
[3] | ||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||
| Net income | $ 94,450 | $ 101,609 | [1],[2],[4] | $ 294,494 | $ 274,011 | [1],[2],[4] | |||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
| Depreciation and amortization | 26,775 | 25,588 | 80,495 | 71,541 | |||||||||||||||
| Amortization of debt discount and transaction costs | 4,062 | 5,630 | 14,470 | 16,740 | |||||||||||||||
| Repayments of convertible notes attributable to debt discount | (552) | 0 | (33,115) | 0 | |||||||||||||||
| Deferred income taxes | 1,983 | 273 | (1,705) | 7,831 | |||||||||||||||
| Share-based compensation expense | [5] | 56,278 | 52,318 | 154,969 | 142,983 | ||||||||||||||
| Net amortization of bond premium on debt securities available for sale | 256 | 2,113 | 1,542 | 6,988 | |||||||||||||||
| Other | 274 | (214) | 3,924 | 1,318 | |||||||||||||||
| Changes in operating assets and liabilities, net of effects of acquisitions: | |||||||||||||||||||
| Accounts receivable | (219,184) | (113,898) | 58,206 | 111,899 | |||||||||||||||
| Other receivables | (23,310) | 135 | (43,555) | (20,211) | |||||||||||||||
| Prepaid expenses | 2,903 | (7,062) | 34,565 | (6,831) | |||||||||||||||
| Accounts payable and accrued expenses | 40,325 | 35,562 | 38,620 | (17,754) | |||||||||||||||
| Deferred revenue | 153,111 | 57,275 | 14,733 | (29,017) | |||||||||||||||
| Other | (643) | 978 | (1,964) | 1,577 | |||||||||||||||
| Net cash provided by operating activities | 136,728 | 160,307 | 615,679 | 561,075 | |||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||
| Purchase of investment in debt securities available for sale | (99,890) | (26,580) | (217,951) | (285,773) | |||||||||||||||
| Proceeds from maturities of investment in debt securities available for sale | 66,406 | 130,941 | 259,460 | 348,285 | |||||||||||||||
| Proceeds from sales of investment in debt securities available for sale | 0 | 5,293 | 8,491 | 19,617 | |||||||||||||||
| Proceeds from sales of strategic equity investments | 0 | 0 | 1,300 | 0 | |||||||||||||||
| Acquisition of businesses, net of cash acquired | (11,550) | 0 | (11,550) | (83,965) | |||||||||||||||
| Purchase of developed software and other intangible assets | (1,003) | (3,426) | (7,127) | (12,871) | |||||||||||||||
| Purchase of property and equipment | (18,229) | (16,587) | (44,845) | (68,268) | |||||||||||||||
| Other | 0 | 84 | (986) | (105) | |||||||||||||||
| Net cash (used in) provided by investing activities | (64,266) | 89,725 | (13,208) | (83,080) | |||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||||
| Proceeds from exercise of common stock options | 767 | 711 | 1,831 | 4,541 | |||||||||||||||
| Proceeds from employee stock purchase program | 14,409 | 10,575 | 43,356 | 33,288 | |||||||||||||||
| Payments related to net settlement of share-based compensation awards | (32,873) | (37,807) | (127,605) | (86,230) | |||||||||||||||
| Purchase of treasury stock | (12,791) | (100,000) | (412,845) | (237,002) | |||||||||||||||
| Payments on other borrowings | (201) | (346) | (750) | (1,207) | |||||||||||||||
| Repayments of convertible notes attributable to principal | (4,036) | (6) | (241,979) | (6) | |||||||||||||||
| Net cash used in financing activities | (34,725) | (126,873) | (737,992) | (286,616) | |||||||||||||||
| Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash | (1,980) | (2,295) | (49,339) | 48,985 | |||||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 35,757 | 120,864 | (184,860) | 240,364 | |||||||||||||||
| Cash, cash equivalents and restricted cash at beginning of the period | 1,503,515 | 1,210,308 | 1,724,132 | [6] | 1,090,808 | ||||||||||||||
| Cash, cash equivalents and restricted cash at end of the period | 1,539,272 | 1,331,172 | 1,539,272 | 1,331,172 | |||||||||||||||
| Restricted cash included in cash, cash equivalents and restricted cash | $ 1,015 | $ 3,099 | $ 1,015 | $ 3,099 | |||||||||||||||
| |||||||||||||||||||
Company |
9 Months Ended |
|---|---|
Nov. 30, 2018 | |
| Accounting Policies [Abstract] | |
| Company | Company and Merger Agreement Red Hat, Inc., incorporated in Delaware, together with its subsidiaries (“Red Hat” or the “Company”) is a leading global provider of open source software solutions, using a community-powered approach to develop and offer reliable and high-performing operating system, virtualization, management, middleware, cloud, mobile and storage technologies. Open source software is an alternative to proprietary software and represents a different model for the development and licensing of commercial software code than that typically used for proprietary software. Because open source software code, generally, is freely shared, there are customarily no licensing fees for the use of open source software. Therefore, the Company does not recognize revenue from the licensing of the code itself. The Company provides value to its customers through the development, aggregation, integration, testing, certification, delivery, maintenance, enhancement and support of its Red Hat technologies, and by providing a level of performance, scalability, flexibility, reliability and security for the technologies the Company packages and distributes. Moreover, because communities of developers not employed by the Company assist with the creation of the Company’s open source offerings, opportunities for further innovation of the Company’s offerings are supplemented by these communities. The Company derives its revenue and generates cash from customers primarily from two sources: (i) subscription revenue and (ii) training and services revenue. These arrangements typically involve subscriptions to Red Hat technologies. The arrangements with the Company’s customers that produce this revenue and cash are explained in further detail in NOTE 2—Summary of Significant Accounting Policies. Merger Agreement On October 28, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with International Business Machines Corporation, a New York corporation (“IBM”), and Socrates Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of IBM (“Sub”), pursuant to which, among other things, Sub will merge with and into the Company, with the Company surviving as a wholly-owned subsidiary of IBM (the “Merger”). The board of directors of each of the Company and IBM approved the Merger and the Merger Agreement. At the effective time of the Merger (the “Effective Time”), subject to the terms and conditions of the Merger Agreement, each share of common stock par value $0.0001 per share, of the Company (the “Company Common Stock”) issued and outstanding immediately prior to the Effective Time (other than (i) canceled shares, (ii) dissenting shares, and (iii) subsidiary converted shares) shall be converted into the right to receive $190.00 in cash, without interest. On December 12, 2018, the Company filed its definitive proxy statement on Schedule 14A (the “Proxy Statement”) with the SEC for a special meeting of its stockholders to be held on January 16, 2019 in connection with the Merger. The transaction is expected to close in the latter half of 2019, subject to certain conditions, including receipt of regulatory approvals. Until the closing, the Company will continue to operate as an independent company. The Company has incurred Merger-related costs of $27.9 million included in General and administrative expenses in the Company’s Consolidated Statement of Operations for the three and nine months ended November 30, 2018. Consummation of the Merger is subject to certain customary conditions, including, without limitation, (i) the approval by the affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock entitled to vote at a special meeting of the Company’s stockholders to approve the Merger; (ii) the receipt of approvals, or the expiration or termination of the applicable waiting periods, under certain antitrust laws (including the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) and clearance under Council Regulation 134/2004 of the European Union); and (iii) the absence of any temporary restraining order, preliminary or permanent injunction or other judgment or law issued by certain courts of competent jurisdiction or other governmental entity, in each case prohibiting consummation of the Merger, and no action or proceeding by a governmental entity before any court or certain other governmental entities of competent jurisdiction seeking to enjoin, restrain or otherwise prohibit consummation of the Merger. Each party’s obligation to consummate the Merger is subject to certain other customary conditions. The Merger Agreement contains certain customary termination rights for the Company and IBM. Subject to certain limitations, the Merger Agreement may be terminated by either IBM or the Company if (i) the Merger is not consummated on or before October 28, 2019, which is subject to extension for two consecutive three month periods by either party if all conditions are satisfied other than receipt of regulatory approvals and absence of legal restraints, (ii) an order having the effect of making the Merger illegal or otherwise prohibiting consummation of the Merger becomes final and non-appealable and (iii) if the stockholder approval is not obtained. A description of the material terms of the Merger Agreement is available in the Company’s Current Report on Form 8-K filed with the SEC on October 29, 2018. The foregoing description of the Merger Agreement is qualified in its entirety by reference to the full text of the Merger Agreement, which has been filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 29, 2018 and herewith as Exhibit 2.1.
|
Summary of Significant Accounting Policies |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of presentation The unaudited interim consolidated financial statements as of and for the three and nine months ended November 30, 2018 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These consolidated statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary for a fair statement of the consolidated balance sheets, consolidated operating results, consolidated other comprehensive income and consolidated cash flows for the periods presented in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). Operating results for the three and nine months ended November 30, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending February 28, 2019. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the SEC’s rules and regulations for interim reporting. These unaudited financial statements should be read in conjunction with the Company’s Consolidated Financial Statements, including notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2018. Other than the accounting pronouncement adopted during the three months ended May 31, 2018 related to accounting for revenue from contracts with customers as described below, there have been no changes to the Company’s significant accounting policies from those described in NOTE 2—Summary of Significant Accounting Policies to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2018. The Company adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers, now commonly referred to as Accounting Standards Codification Topic 606 (“ASC 606”), effective March 1, 2018, using the full retrospective transition method. All amounts and disclosures set forth in this Form 10-Q have been updated to comply with the new standard and such information is designated “as adjusted.” Certain amounts for the three and nine months ended November 30, 2017 have been reclassified to conform to the current period presentation. The Company’s fiscal year ends on the last day of February, and the Company identifies fiscal years by the calendar years in which they end. For example, the fiscal year ending February 28, 2019 is referred to as “fiscal 2019.” Consolidation policy The accompanying Consolidated Financial Statements include the accounts of the Company and all of its wholly owned subsidiaries. All significant inter-company accounts and transactions are eliminated in consolidation. There are no significant foreign exchange restrictions on the Company’s foreign subsidiaries. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from such estimates. Estimates are used for, but not limited to, revenue recognition, goodwill and other long-lived assets, share-based compensation, income taxes and loss contingencies. Revenue recognition The Company derives its revenues from subscription contracts and training and service contracts. Revenue is recognized when performance obligations, as stipulated in the contracts, are transferred to a customer for an amount that reflects the consideration the Company expects to receive in exchange for those subscription contracts and training and service contracts. The Company applies the following five steps to recognize revenue: 1) Identify the contract with a customer. The Company determines that it has a contract with a customer when the contract is approved, the party’s rights regarding the products and services to be transferred can be identified, the payment terms for the products and services are identified, the customer’s ability and intent to pay can be determined, and the contract has commercial substance. Judgment is used to assess the customer’s ability and intent to pay, which is based upon factors including the customer’s historical payment experience or credit and financial information pertaining to the customer. 2) Identify the performance obligations in the contract. The Company’s performance obligations are identified based on the products and services that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract and consist of (i) subscription offerings, including non-proprietary open-source software code delivered to the customer, software support subscriptions delivered to the customer, software support subscriptions embedded in partner products and learning subscriptions and (ii) training and services, including professional services sold at a fixed fee, professional services sold on a time-and-material-basis, training courses or units, and consulting units. In limited cases, the option to purchase additional subscription offerings or training and services may be offered at a price representing a material right. In such cases, the option to purchase is considered a distinct performance obligation. 3) Determine the transaction price. The Company determines transaction price based on the consideration expected to be received in exchange for transferring certain performance obligations to the customer. In determining the transaction price, variable consideration, if any, would be considered if, in management’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. The Company’s contracts do not contain significant financing components. Specifically, the Company does not typically extend customer payment terms beyond a standard 30- to 60-day term and as a result the Company has elected the one-year-or-less safe harbor expedient and does not impute any interest. The Company has elected to exclude all taxes from the transaction price (e.g. sales, use, value-added, etc.). Revenue is recognized net of such taxes. 4) Allocate the transaction price to performance obligations in the contract. When a contract contains a single performance obligation, the entire transaction price is allocated to that one performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price (“SSP”). The Company typically determines SSP based on the observable price when the Company sells the subscriptions or training and services separately, taking into consideration the geographical region of the customer, type of offering and sales channel. In instances where SSP is not directly observable, the Company determines SSP either from the renewal rate paid for the performance obligation to the extent it is the same rate as stipulated in the initial customer contract or by using the expected-cost-plus-margin approach. 5) Recognize revenue when or as the performance obligation is satisfied. Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised subscription offerings and training and services to a customer. For each performance obligation, a determination is made as to whether the control is transferred over time or at a point in time. For performance obligations satisfied over time, a method to measure progress toward complete satisfaction is selected, based upon the most faithful depiction of performance. The selected method for each performance obligation type is applied consistently to similar contracts. Subscription revenue Subscription revenue is comprised of direct and indirect sales of subscriptions relating to Red Hat technologies. Accounts receivable and deferred revenue are recorded at the time a customer enters into a binding and non-cancellable subscription agreement for the purchase of a subscription, subscription services are made available to the customer and the customer is billed. The deferred revenue amount is recognized as revenue ratably over the subscription period. Red Hat technologies are generally offered with base subscription periods of either one year or three years; the majority of the Company’s subscriptions have terms of one year. Under these subscription agreements, renewal rates are generally specified for renewal terms of one year or three years. Subscriptions generally entitle the end user to the technology itself and post-contract customer support, generally consisting of varying levels of support services as well as access to security updates, fixes, functionality enhancements, upgrades to the technologies, each on an if and when available basis, and compatibility with an ecosystem of certified hardware and software, during the term of the subscription. The Company sells its offerings through two principal channels: (1) direct, which includes sales by the Company’s sales force as well as web store sales, and (2) indirect, which includes certified cloud and service providers (“CCSPs”), distributors, original equipment manufacturers (“OEMs”), systems integrators and value added resellers. The Company recognizes revenue from the sale of Red Hat technologies ratably over the period of the subscription beginning on the commencement date of the subscription agreement. The Company has determined that the delivery of software code underlying the subscription is a distinct performance obligation as it is both capable of being distinct and is distinct within the context of a customer contract. The Company uses a non-proprietary open-source development and licensing model to provide its software technologies to customers and therefore the amount of transaction price allocated to the underlying software code is negligible. The Company derives a portion of its revenue from CCSPs that provide public clouds with, and allow users to consume, computing resources as a service. The Company earns revenue based on subscription units consumed by the CCSP or its end users. The Company uses its historical cloud-usage data to estimate the amount of revenue earned and recognized each month and adjusts to actual amounts earned upon receipt of usage reports from the CCSPs in the following month. The differences between actual amounts earned and estimates made have generally been insignificant. Training and services revenue Training and services revenue is comprised of revenue for consulting, engineering and customer training courses or units and education services. Consulting services consist of time-based units or fixed-fee arrangements. For time-based arrangements, revenue is recognized over time as these services are performed and for fixed-fee arrangements, revenue is recognized based on the proportion of services performed. Engineering services represent revenue earned under fixed-fee arrangements with the Company’s OEM partners and other customers to provide for significant modification and customization of Red Hat technologies. The Company recognizes revenue for these fixed-fee engineering services based on a proportional performance basis using actual costs incurred to date over the estimated total projected costs, which includes a representative profit margin. A representative profit margin is determined based on analysis of a population of similar contracts by region. Revenue for customer training and education services is recognized on the dates the services are performed. See NOTE 16—Segment Reporting for further information, including revenue by geographic area and significant product and service offerings. Contract Balances Timing of revenue recognition may differ from the timing of invoicing to customers. The Company records a receivable when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. For multi-year arrangements, the Company will generally invoice customers upfront or annually at the beginning of each annual coverage period. See below for the accounting policy related to receivables and see NOTE 12—Deferred Revenue and Performance Obligations for further information on deferred revenue balances. Accounts receivable and allowance for doubtful accounts Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on historical write-off experience and other qualitative factors. The Company reviews its allowance for doubtful accounts monthly. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis by type of receivable. Account balances are charged off against the allowance when the Company determines it is probable the receivable will not be recovered. The Company does not have off-balance sheet credit exposure related to its customers. Unbilled receivables related to subscription and training and services contracts are included in accounts receivable. See NOTE 3—Accounts Receivable for further information on accounts receivable balances. Deferred selling costs Deferred commissions are the incremental costs that are directly associated with non-cancellable subscription contracts with customers and consist of sales commissions and certain related fringe benefits earned by the Company’s sales force. The commissions are deferred and amortized on a straight-line basis over a period that approximates the subscription period. In determining the period that approximates the subscription period, the Company utilizes a portfolio approach that allows for the analysis of customer contracts with similar characteristics. The Company has determined that the effects on the financial statements of the portfolio approach would not differ materially from an individual customer contract analysis approach. The commission payments are paid in full subsequent to the month in which the customer’s service commences. The deferred commission amounts are recoverable through the future revenue streams under the non-cancellable customer contracts. In addition, the Company has the ability and intent under the commission plans with its sales force to recover commissions previously paid to its sales force in the event that customers breach the terms of their subscription agreements and do not fully pay for their subscription agreements. See NOTE 5—Deferred Selling Costs for further information on deferred commissions and the related amortization of deferred commissions. Recent accounting pronouncements Accounting pronouncements adopted In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”). The FASB issued ASU 2018-02 to give entities the option to reclassify tax effects stranded in accumulated other comprehensive income as a result of the enactment of the Tax Cuts and Jobs Act (the “Tax Act”) to retained earnings. The Company adopted ASU 2018-02 as of June 1, 2018. The Company opted not to reclassify tax effects stranded in accumulated other comprehensive income as a result of the enactment of the Tax Act to retained earnings. In January 2016, the FASB issued Accounting Standards Update 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). The FASB issued ASU 2016-01 to require equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income. Equity investments that do not have readily determinable fair values are allowed to be remeasured upon the occurrence of an observable price change or upon identification of an impairment. Along with ASU 2016-01, the Company evaluated the Accounting Standards Update 2018-03, Technical Corrections and Improvements to Financial Instruments Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2018-03”), which was issued in February 2018, and Accounting Standards Update 2018-04, Investments—Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273 (“ASU 2018-04”), which was issued in March 2018. The Company adopted ASU 2016-01, ASU 2018-03 and ASU 2018-04 as of March 1, 2018. The adoption of these standards did not significantly impact the Company’s Consolidated Financial Statements. In May 2014, the FASB issued ASC 606 to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance. ASC 606 requires the recognition of revenue when control of performance obligations as stipulated in the contracts, is transferred to a customer for an amount that reflects the consideration the entity expects to receive in exchange promised goods and services. The standard also includes Subtopic 340-40, Other Assets and Deferred Costs—Contracts with Customers, which requires the deferral of incremental costs of obtaining a contract with a customer. Collectively, ASC 606 and Subtopic 340-40 are referred to as “ASC 606.” The Company adopted ASC 606 as of March 1, 2018, utilizing the full retrospective method of transition, which requires a restatement of each prior reporting period presented. In adopting ASC 606, the Company used the practical expedient where the transaction price allocated to the remaining performance obligations before the date of the initial application is not disclosed. The Company implemented new policies, processes and systems to enable both the preparation of financial information and internal controls over financial reporting in connection with its adoption of ASC 606. The impact of adopting ASC 606 on the Company’s fiscal 2018 and fiscal 2017 revenue was not material. The primary impact of adopting the standard related to the deferral of incremental commission and other costs of obtaining contracts with customers. Previously, the Company deferred direct and incremental commission costs to obtain a contract and amortized those costs on a straight-line basis over a period that approximated the subscription period, and under ASC 606, the Company now also defers related fringe benefit costs. Select adjusted unaudited financial statement information, which reflects the Company’s adoption of ASC 606, is set forth below. Consolidated balance sheets (in thousands):
Consolidated statements of operations (in thousands, except per share amounts):
The Company’s adoption of ASC 606 had no impact on net cash provided by or used in operating, investing or financing activities for any of the periods reported. Accounting pronouncements being evaluated In August 2018, the FASB issued Accounting Standards Update 2018-15, Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) (“ASU 2018-15”). The FASB issued ASU 2018-15 to align the requirements for capitalizing implementation costs in a cloud computing arrangement service contract with the requirements for capitalizing implementation costs incurred for an internal-use software license. The guidance is effective for the Company as of the first quarter of its fiscal year ending February 28, 2021, with early adoption permitted. The Company is currently evaluating the impact that this updated standard will have on its consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842) (“ASU 2016-02”). The FASB issued ASU 2016-02 to increase transparency and comparability among organizations with respect to accounting for leases. Under ASU 2016-02, lessees will recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. This guidance is effective for the Company as of the first quarter of its fiscal year ending February 28, 2020. Along with ASU 2016-02, the Company is also evaluating Accounting Standards Update 2018-10, Codification Improvements to Topic 842 Leases (“ASU 2018-10”) and Accounting Standards Update 2018-11, Targeted Improvements to Topic 842 Leases (“ASU 2018-11”). The Company expects to adopt the transition method, which will not require adjustments to comparative periods nor require modified disclosures in those comparative periods. Upon adoption, the Company expects to elect the transition package of practical expedients permitted within the new standard, which among other things, allows the carryforward of the historical lease classification. Further, upon implementation of the new guidance, the Company intends to elect the practical expedients to combine lease and non-lease components for all asset classes, to not recognize right-of-use assets and lease liabilities for short-term leases for all asset classes and to use hindsight in determining the lease term and assessing impairment of right-of-use assets. The Company continues to assess the impact of ASU 2016-02, ASU 2018-10 and ASU 2018-11, now commonly referred to as Accounting Standards Codification Topic 842 (“ASC 842”), including for example, any potential changes to and investments in the Company’s policies, processes, systems and internal controls over financial reporting that may be required to comply with the new guidance related to identifying and measuring right-of-use assets and lease liabilities. While the Company continues to evaluate the effect of adopting this guidance on its consolidated financial statements and related disclosures, it is expected that the operating leases, as disclosed in NOTE 13—Commitments and Contingencies contained in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2018, will be reported in the consolidated balance sheets upon adoption.
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Accounts Receivable |
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| Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts Receivable | Accounts Receivable Accounts receivable are presented net of an allowance for doubtful accounts. Activity in the Company’s allowance for doubtful accounts is presented in the following table (in thousands):
_______________
Included in accounts receivable, net of allowance for doubtful accounts, are unbilled receivables of $35.1 million and $25.8 million as of November 30, 2018 and February 28, 2018, respectively. As of November 30, 2018 and February 28, 2018, no individual customer accounted for 10% or more of the Company’s total accounts receivable.
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Identifiable Intangible Assets |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Identifiable Intangible Assets | Identifiable Intangible Assets Identifiable intangible assets consist primarily of trademarks, copyrights and patents, purchased technologies, customer and reseller relationships and covenants not to compete, all of which are amortized over the estimated useful life, generally on a straight-line basis, with the exception of customer and reseller relationships, which are generally amortized over the greater of straight-line over the estimated useful life or the related asset’s pattern of economic benefit. Useful lives range from two years to 10 years. As of November 30, 2018 and February 28, 2018, trademarks with an indefinite estimated useful life totaled $11.4 million and $12.0 million, respectively. The following is a summary of identifiable intangible assets (in thousands):
Amortization expense associated with identifiable intangible assets recognized in the Company’s Consolidated Financial Statements is summarized as follows (in thousands):
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Deferred Selling Costs |
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| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred Selling Costs | Deferred Selling Costs Deferred selling costs include commissions paid to the Company’s sales associates that are the incremental costs incurred to obtain contracts with customers. The commissions are deferred and amortized over a period to approximate the period of the subscription term. For further discussion on deferred commissions, see NOTE 2—Summary of Significant Accounting Policies. Current and non-current deferred commissions are included in Prepaid expenses and Other assets, respectively, in the Company’s Consolidated Balance Sheets and are as follows (in thousands):
____________________
Activity in the Company’s deferred revenue accounts is presented in the following table (in thousands):
____________________
As of November 30, 2018, the value of customer contracts allocated to performance obligations not yet satisfied, including $2.53 billion of total deferred revenue, was approximately $3.35 billion, of which approximately 60% is expected to be recognized as revenue within the next 12 months and the remainder thereafter. In addition to the approximately $3.35 billion of customer contract value allocated to performance obligations not yet satisfied, as of November 30, 2018, the Company has offered customers options to purchase additional services at an agreed-upon price per hour that total approximately $145.4 million. The summation of the customer contract value allocated to performance obligations not yet satisfied and the options to purchase additional services equals approximately $3.50 billion, which the Company considers as its total backlog.
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Derivative Instruments |
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments | Derivative Instruments The Company transacts business in various foreign countries and is, therefore, subject to risk of foreign currency exchange rate fluctuations. From time to time, the Company enters into forward contracts to economically hedge transactional exposure associated with commitments arising from trade accounts receivable, trade accounts payable and fixed purchase obligations denominated in a currency other than the functional currency of the respective operating entity. All derivative instruments are recorded in the Consolidated Balance Sheets at their respective fair values. The Company has elected not to prepare and maintain the documentation required to qualify for hedge accounting treatment and, therefore, changes in fair value are recorded in the Consolidated Statements of Operations. See NOTE 15—Assets and Liabilities Measured at Fair Value on a Recurring Basis for information regarding the fair value hierarchy of derivative instruments. The effects of derivative instruments on the Company’s Consolidated Financial Statements are as follows (in thousands):
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Income Taxes |
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| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was enacted into law. This new law includes significant changes to the U.S. corporate income tax system, including a permanent reduction in the corporate income tax rate from 35% to 21%, limitations on the deductibility of interest expense and executive compensation, elimination of the domestic production activities deduction and the transition of U.S. international taxation from a worldwide tax system to a territorial tax system. On November 26, 2018, the Department of the U.S. Treasury and the Internal Revenue Service issued proposed regulations under Section 163(j), which generally limits the amount of business interest expense that can be deducted in the current taxable year. Further, on November 28, 2018, the Department of the U.S. Treasury also issued proposed regulations under and related to foreign tax credits covered in the Internal Revenue Code Sections 78, 861, 901, 904, 954, 960, and 965. The adoption of the proposed regulations did not significantly impact the Company’s Consolidated Financial Statements. On August 21, 2018, the Internal Revenue Service issued Notice 2018–68 providing guidance regarding amendments to Section 162(m) of the Internal Revenue Code contained in the Tax Act (“IRS Guidance”), which limit tax deductions for compensation granted to certain executives. As a result of this guidance, our provision for income taxes for the three and nine months ended November 30, 2018 includes $18.0 million tax expense to reflect the impact of this tax deduction limitation which was previously recognized during the three months ended August 31, 2018. In December 2017, the SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC Topic 740—Income Taxes (“ASC 740”). The Company has completed its analysis within fiscal 2019 consistent with the guidance provided in SAB 118, and any adjustments during this measurement period have been included in net earnings from continuing operations as an adjustment to income tax expense. The additional tax expense of $18.0 million resulting from the IRS Guidance discussed above was an adjustment during the SAB 118 measurement period. The effective tax rate for the three and nine months ended November 30, 2018, of 15.3% and 17.8%, respectively, differed from the U.S. federal statutory rate of 21% primarily due to excess tax benefits from share-based compensation, research tax credits and the impact from the Tax Act. Tax expense for the three and nine months ended November 30, 2018 included net discrete tax benefits of $6.5 million and $17.6 million, respectively, primarily related to the impact from share-based compensation. Net discrete tax benefits of $17.6 million for the nine months ended November 30, 2018 is inclusive of the $18.0 million adjustment pursuant to SAB 118. For the three and nine months ended November 30, 2017, the Company’s then-effective tax rate of 12.6% (1) and 18.3% (1), respectively, differed from the U.S. federal statutory rate of 35% primarily due to excess tax benefits from share-based compensation, foreign income taxed at lower rates, research tax credits and the domestic-production-activities deduction. Tax expense for the three and nine months ended November 30, 2017, included net discrete tax benefits of $15.5 million and $28.5 million, respectively, primarily related to net excess tax benefits from share-based compensation. The Company files a consolidated U.S. federal income tax return, as well as separate and combined income tax returns in numerous state and international jurisdictions. The Company is currently subject to examination by various taxing jurisdictions. The Company regularly assesses the potential outcomes of both ongoing and future examinations for the current and prior years, and believes that its provision for income taxes is adequate. The outcome of any one examination is not expected to have a material impact on the Company’s consolidated financial statements. The Company believes that some of these audits and negotiations may conclude during the next 12 months. As of November 30, 2018, it is reasonably possible that total unrecognized tax benefits may be reduced by less than $1.0 million within the next 12 months primarily as a result of statute of limitation expirations in various tax jurisdictions, some of which would affect the Company’s effective tax rate. ____________________ (1) As adjusted to reflect the impact of the retrospective application of ASC 606. See NOTE 2—Summary of Significant Accounting Policies for detailed information on adoption of ASC 606.
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Convertible Notes |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Notes | Convertible Notes Convertible note offering On October 7, 2014, the Company completed its offering of $805.0 million aggregate principal amount of the convertible notes. The convertible notes were sold in a private placement under a purchase agreement, dated as of October 1, 2014, entered into by and among the Company and the initial purchasers, for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. For additional information, see NOTE 11—Convertible Notes to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2018. Indenture On October 7, 2014, the Company entered into an indenture (the “Indenture”) with respect to the convertible notes with U.S. Bank National Association, as trustee (the “Trustee”). Under the Indenture, the convertible notes are senior unsecured obligations of the Company and bear interest at a rate of 0.25% per year, payable semiannually in arrears on April 1 and October 1 of each year, beginning on April 1, 2015. The convertible notes will mature on October 1, 2019, unless previously purchased or converted. The convertible notes are convertible into shares of the Company’s common stock at an initial conversion rate of 13.6219 shares per $1,000 principal amount of the convertible notes (which is equivalent to an initial conversion price of approximately $73.41 per share), subject to adjustment upon the occurrence of certain events. Upon conversion of the convertible notes, holders will receive cash or shares of the Company’s common stock or a combination thereof, at the Company’s election. At their option, holders may convert their convertible notes prior to the close of business on the business day immediately preceding April 1, 2019, only upon the occurrence of certain circumstances. For example, during any fiscal quarter commencing after the fiscal quarter ended on November 30, 2014 (and only during such fiscal quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price, the convertible notes become convertible at the holders’ option. The price of the Company’s common stock was greater than or equal to 130% of the conversion price, which is $95.43, for at least 20 trading days during the 30 consecutive trading days ending on the last trading day of each of the fiscal quarters ended August 31, 2017 through November 30, 2018. Therefore, as of November 30, 2018, the convertible notes remain convertible at the holders’ option until February 28, 2019. On and after April 1, 2019, holders may convert their convertible notes at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the convertible notes. During the third quarter of the fiscal year ending February 28, 2019, the Company settled notices of conversion with respect to $4.6 million aggregate principal amount of the convertible notes and elected to settle such conversions by paying cash for the principal amount and issuing 30,257 shares of common stock for the excess conversion value. During the third quarter of the fiscal year ending February 28, 2019, the Company recognized insignificant losses on settled conversions and $1.7 million of losses for the nine months ended November 30, 2018. Total settled conversions as of November 30, 2018 amounted to $275.1 million aggregate principal amount of the convertible notes. The Company expects to settle conversions of $197.1 million in principal amount of the convertible notes in the fourth quarter of the fiscal year ending February 28, 2019 by paying cash for the principal amount and issuing shares of common stock for the excess conversion value. The Company continues to receive conversion requests and as of January 2, 2019, such incremental requests totaled $26.4 million in principal amount of the convertible notes. The aggregate principal amount of the convertible notes remaining is expected to be $306.4 million after the expected conversion settlements as discussed above and the incremental conversion requests received as of January 2, 2019. Based on the closing price of the Company’s common stock of $178.56 on the last trading day of the third quarter of the fiscal year ending February 28, 2019, the if-converted value of the convertible notes as of November 30, 2018 exceeded their principal amount by approximately $758.9 million. The Company continues to classify the net carrying amount of the convertible notes as a long-term liability, except for $192.0 million, classified as current and expected to be cash-settled within the next fiscal quarter. The equity component of the convertible notes will continue to be classified as additional paid-in capital because the Company has the option to settle the principal amount in shares. However, it is the Company’s intent to settle the principal amount of the convertible notes in cash. The conversion rate is subject to customary anti-dilution adjustments. If certain corporate events described in the Indenture occur prior to the maturity date, the conversion rate will be increased for a holder who elects to convert its convertible notes in connection with such corporate event in certain circumstances. The convertible notes are not redeemable prior to maturity, and no sinking fund is provided for the notes. If the Company undergoes a “fundamental change,” as defined in the Indenture, subject to certain conditions, holders may require the Company to purchase for cash all or any portion of their convertible notes. The fundamental change purchase price will be 100% of the principal amount of the convertible notes to be purchased plus any accrued and unpaid interest up to but excluding the fundamental change purchase date. If the Merger with IBM is consummated, it will constitute a “fundamental change” under the Indenture. The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of at least 25% in principal amount of the outstanding convertible notes may declare 100% of the principal of, and accrued and unpaid interest, if any, on, all the convertible notes to be due and payable. In accounting for the issuance of the convertible notes, the Company separated the convertible notes into liability and equity components. The Company allocated the total transaction costs incurred to the liability and equity components based on their relative fair values. Issuance costs attributable to the liability component are being amortized to interest expense over the term of the convertible notes. The excess of the face value of the convertible notes as a whole over the carrying amount of the liability component (the “debt discount”) is being amortized to interest expense over the term of the convertible notes. In addition, the debt discount is impacted by the derecognition of the original debt discount on early settlements of convertible notes. The convertible notes consisted of the following (in thousands):
The following table includes total interest expense recognized related to the convertible notes (in thousands):
The fair value of the convertible notes, which was determined based on inputs that are observable in the market (Level 2), and the carrying value of convertible notes (the carrying value excludes the equity component of the convertible notes classified in equity) is as follows (in thousands):
Convertible note hedge transactions and warrant transactions On October 1, 2014, the Company entered into convertible note hedge transactions and warrant transactions with certain of the initial purchasers of the convertible notes or their respective affiliates. In connection with the conversions of the convertible notes that settled in the third quarter of the fiscal year ending February 28, 2019, the Company exercised a portion of the options that are part of the convertible note hedge transactions for 30,249 shares of the Company’s common stock. The convertible note hedge transactions are expected to offset, to the extent the Company’s common stock per share price does not exceed the $101.65 strike price of the warrants, which is subject to adjustments upon the occurrence of certain events, the potential dilution with respect to shares of the Company’s common stock upon any conversion of the convertible notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted notes, as the case may be. To partially offset the $148.0 million cost of the convertible note hedge transactions, the Company issued warrants and received proceeds of $79.8 million. The number of shares of the Company’s common stock underlying the warrants total 10,965,630, the number of shares originally underlying the convertible notes and the convertible note hedge transactions. The combination of the convertible note hedge transactions and the warrant transactions effectively increases the initial conversion price of the convertible notes from $73.41 per share to $101.65 per share. As a result, the warrant transactions will have a dilutive effect with respect to the Company’s common stock to the extent that the market price per share of the Company’s common stock, as measured under the terms of the warrant transactions, exceeds the $101.65 strike price of the warrants. For the three and nine months ended November 30, 2018, the warrants were included in the computation of diluted shares outstanding because the warrants’ exercise price was less than the average market price of the Company’s common stock during the related period. However, subject to certain conditions, the Company may elect to settle all of the warrants in cash.
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Commitments and Contingencies |
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Nov. 30, 2018 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | Commitments and Contingencies Operating leases As of November 30, 2018, the Company leased office space and certain equipment under various non-cancellable operating leases. Rent expense under operating leases for the three months ended November 30, 2018 and November 30, 2017 was $14.8 million and $12.9 million, respectively. Rent expense under operating leases for the nine months ended November 30, 2018 and November 30, 2017 was $41.9 million and $38.1 million, respectively. Product indemnification The Company is a party to a variety of agreements pursuant to which it may be obligated to indemnify the other party from losses arising in connection with the Company’s services or products, or from losses arising in connection with certain events defined within a particular contract, which may include litigation or claims relating to intellectual property infringement, certain losses arising from damage to property or injury to persons or other matters. In each of these circumstances, payment by the Company is conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, which procedures typically allow the Company to challenge the other party’s claims. Further, the Company’s obligations under these agreements may in certain cases be limited in terms of time and/or amount, and in some instances, the Company may have recourse against third parties for certain payments made by the Company. It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the Company’s obligations and the facts and circumstances involved in each particular agreement. The Company does not record a liability for claims related to indemnification unless the Company concludes that the likelihood of a material claim is probable and estimable. Payments pursuant to these indemnification claims during the three and nine months ended November 30, 2018 and November 30, 2017 were, in the aggregate, immaterial.
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Legal Proceedings |
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Nov. 30, 2018 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Legal Proceedings | Legal Proceedings The Company experiences routine litigation in the normal course of its business, including patent litigation. The Company presently believes that the outcome of this routine litigation will not have a material adverse effect on its financial position, results of operations or cash flows. In addition, three putative class action complaints were filed against Red Hat and its board of directors relating to the Merger with IBM. As of January 4, 2019, we received the following complaints, each filed in the United States District Court for the District of Delaware: Charles Orgel, individually and on behalf of all others similarly situated v. Red Hat, Inc., et al. (filed December 18, 2018), Michael Kent, individually and on behalf of all others similarly situated v. Red Hat, Inc., et al. (filed December 19, 2018) and Christopher Nunn Bishop, individually and on behalf of all others similarly situated v. Red Hat, Inc., et al. (filed December 21, 2018) (together, the “Actions”). The complaints in the Actions allege that the Proxy Statement omits purportedly material information in violation of Sections 14(a) and 20(a) of the Exchange Act, rendering the Proxy Statement false and misleading. On January 4, 2019, the parties reached an agreement whereby the Actions would be dismissed as moot in exchange for supplemental disclosures filed by the Company. Those supplemental disclosures were filed by the Company on January 4, 2019. Plaintiffs in the Actions have reserved the right to seek an award of attorneys’ fees for causing the filing of the supplemental disclosures.
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| Stockholders' Equity | Stockholders’ Equity The following table summarizes the changes in the Company’s stockholders’ equity during the three months ended November 30, 2018 (in thousands):
The following table summarizes the changes in the Company’s stockholders’ equity during the three months ended November 30, 2017 (in thousands):
____________________ (1) As adjusted to reflect the impact of the retrospective application of ASC 606. See NOTE 2—Summary of Significant Accounting Policies for detailed information on adoption of ASC 606.The following table summarizes the changes in the Company’s stockholders’ equity during the nine months ended November 30, 2018 (in thousands):
____________________
The following table summarizes the changes in the Company’s stockholders’ equity during the nine months ended November 30, 2017 (in thousands):
____________________ (1) As adjusted to reflect the impact of the retrospective application of ASC 606. See NOTE 2—Summary of Significant Accounting Policies for detailed information on adoption of ASC 606.Share repurchase programsOn June 22, 2016, the Company announced that its board of directors authorized the repurchase of up to $1.0 billion of Red Hat’s common stock from time to time on the open market or in privately negotiated transactions. The program commenced on July 1, 2016 and expired on June 30, 2018. From July 1, 2016 through its expiration on June 30, 2018, the Company repurchased 8,167,871 shares of its common stock for $751.3 million under this repurchase program. On June 21, 2018, the Company announced that its board of directors authorized the repurchase of up to $1.0 billion of Red Hat’s common stock from time to time on the open market or in privately negotiated transactions. The new program commenced on July 1, 2018, and will expire on the earlier of (i) June 30, 2020 or (ii) a determination by the board of directors, Chief Executive Officer or Chief Financial Officer to discontinue the program. The new program replaced the previous $1.0 billion repurchase program, which expired on June 30, 2018. From its commencement on July 1, 2018 through November 30, 2018, the Company repurchased 1,838,241 shares of its common stock at an aggregate cost of $262.8 million under this repurchase program. As of November 30, 2018, the amount available under this program for the repurchase of the Company’s common stock was $737.2 million. Pursuant to the Merger Agreement, we do not anticipate additional repurchases of the Company’s common stock prior to the consummation of the Merger with IBM.Accumulated other comprehensive lossAccumulated other comprehensive loss was comprised of the following (in thousands):
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| Deferred Revenue and Performance Obligations | Deferred Selling Costs Deferred selling costs include commissions paid to the Company’s sales associates that are the incremental costs incurred to obtain contracts with customers. The commissions are deferred and amortized over a period to approximate the period of the subscription term. For further discussion on deferred commissions, see NOTE 2—Summary of Significant Accounting Policies. Current and non-current deferred commissions are included in Prepaid expenses and Other assets, respectively, in the Company’s Consolidated Balance Sheets and are as follows (in thousands):
____________________
Activity in the Company’s deferred revenue accounts is presented in the following table (in thousands):
____________________
As of November 30, 2018, the value of customer contracts allocated to performance obligations not yet satisfied, including $2.53 billion of total deferred revenue, was approximately $3.35 billion, of which approximately 60% is expected to be recognized as revenue within the next 12 months and the remainder thereafter. In addition to the approximately $3.35 billion of customer contract value allocated to performance obligations not yet satisfied, as of November 30, 2018, the Company has offered customers options to purchase additional services at an agreed-upon price per hour that total approximately $145.4 million. The summation of the customer contract value allocated to performance obligations not yet satisfied and the options to purchase additional services equals approximately $3.50 billion, which the Company considers as its total backlog.
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Earnings Per Share |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share | Earnings Per Share The Company computes basic net income per common share by dividing net income available to common stockholders by the weighted average number of common shares outstanding. Diluted net income per common share is computed by dividing net income available to common stockholders by the weighted average number of common shares and dilutive potential common share equivalents then outstanding. Potential common share equivalents consist of shares issuable upon the exercise of stock options, vesting of share-based awards, settlement of convertible notes, or exercise of warrants. The following table reconciles the numerators and denominators of the earnings per share (“EPS”) calculation (in thousands, except per share amounts):
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With respect to the Company’s convertible notes, the Company has the option to pay cash or deliver, as the case may be, either cash, shares of its common stock or a combination of cash and shares of its common stock for the aggregate amount due upon conversion of the convertible notes. The Company’s intent is to settle the principal amount of the convertible notes in cash upon conversion. As a result, upon conversion of the convertible notes, only the amounts payable in excess of the principal amounts of the convertible notes are considered in diluted EPS under the treasury stock method. See NOTE 8—Convertible Notes for detailed information on the convertible notes. Warrants to purchase 10,965,630 shares of the Company’s common stock at $101.65 per share were outstanding during the three and nine months ended November 30, 2018 and November 30, 2017. For the three and nine months ended November 30, 2018, the warrants were included in the computation of diluted EPS because the warrants’ exercise price was less than the average market price of the Company’s common stock during the related period. The following share awards are not included in the computation of diluted EPS because the aggregate value of proceeds considered received upon either exercise or vesting was greater than the average market price of the Company’s common stock during the related periods and the effect of including such share awards in the computation would be anti-dilutive (in thousands):
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Share-based Awards |
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| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Awards | Share-based Awards The Company measures share-based compensation cost at the grant date, based on the estimated fair value of the award and recognizes the cost over the employee requisite service period, typically on a straight-line basis. The Company estimates the fair value of stock options using the Black-Scholes-Merton valuation model. The fair value of nonvested share awards, nonvested share units and performance share units are measured at their underlying closing share price on the day of grant. The following summarizes share-based compensation expense recognized in the Company’s Consolidated Financial Statements (in thousands):
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Share-based compensation expense qualifying for capitalization was insignificant for each of the three and nine months ended November 30, 2018 and November 30, 2017. Accordingly, no share-based compensation expense was capitalized during these periods. The following table summarizes the Company’s share-based awards granted, by type:
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(2) Certain executives were granted restricted stock awards. These shares were awarded subject to the achievement of a specified dollar amount of revenue for the fiscal year ending February 28, 2019 (the “RSA Performance Goal”). If the Company fails to achieve the RSA Performance Goal, then all such shares are forfeited. If the Company achieves the RSA Performance Goal, then 25% of the restricted stock vests on or about July 16, 2019, and the remainder vests ratably on a quarterly basis over the course of the subsequent three years, provided that the grantee’s business relationship with the Company has not ceased.
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Assets and Liabilities Measured at Fair Value on a Recurring Basis |
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets and Liabilities Measured at Fair Value on a Recurring Basis | Assets and Liabilities Measured at Fair Value on a Recurring Basis Fair value is defined as the exchange price that would be received for the purchase of an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for such asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3—Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. The Company’s investments are comprised primarily of debt securities that are classified as available for sale and recorded at their fair values. Liquid investments with effective maturities of three months or less at the date of purchase are classified as cash equivalents. Investments with remaining effective maturities of twelve months or less from the balance sheet date are classified as short-term investments. Investments with remaining effective maturities of more than twelve months from the balance sheet date are classified as long-term investments. The Company’s Level 1 financial instruments are valued using quoted prices in active markets for identical instruments. The Company’s Level 2 financial instruments, including derivative instruments, are valued using quoted prices for identical instruments in less active markets or using other observable market inputs for comparable instruments. Unrealized gains and temporary losses on investments classified as available for sale are included within accumulated other comprehensive income, net of any related tax effect. Realized gains and losses are recorded using the specific identification method and upon realization, such amounts are reclassified from accumulated other comprehensive income to Other expense, net. Realized gains and losses and other than temporary impairments, if any, are reflected in the Company’s Consolidated Statements of Operations as Other expense, net. The Company does not recognize changes in the fair value of its investments in income unless a decline in value is considered other than temporary. The vast majority of the Company’s investments are priced by pricing vendors. These pricing vendors use the most recent observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs. In the event observable inputs are not available, the Company assesses other factors to determine the security’s fair value, including broker quotes or model valuations. Independent price verifications of all holdings are performed by pricing vendors that are then reviewed by the Company. In the event a price fails a pre-established tolerance check, it is researched so that the Company can assess the cause of the variance to determine what the Company believes is the appropriate fair value. The Company minimizes its credit risk associated with investments by investing primarily in investment-grade, liquid securities. The Company’s policy is designed to limit exposures to any one issuer depending on credit quality. Periodic evaluations of the relative credit standing of those issuers are considered in the Company’s investment strategy. The following table summarizes the composition and fair value hierarchy of the Company’s financial assets and liabilities at November 30, 2018 (in thousands):
__________
The following table summarizes the composition and fair value hierarchy of the Company’s financial assets and liabilities at February 28, 2018 (in thousands):
__________
The following table represents the Company’s investments measured at fair value as of November 30, 2018 (in thousands):
__________
The following table summarizes the stated maturities of the Company’s investment in available-for-sale securities (in thousands):
The following table represents the Company’s investments measured at fair value as of February 28, 2018 (in thousands):
__________ (1) As of February 28, 2018, there were $4.4 million of accumulated unrealized losses related to investments that have been in a continuous unrealized loss position for 12 months or longer. The aggregate related fair value of investments with unrealized losses was $515.4 million.
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Segment Reporting |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting | Segment Reporting The Company is organized primarily on the basis of three geographic business units: the Americas (U.S., Canada and Latin America), Europe, Middle East and Africa (“EMEA”) and Asia Pacific. These business units are aggregated into one reportable segment due to the similarity in nature of products and services provided, financial performance economic characteristics (e.g. revenue growth and gross margin), methods of production and distribution and customer classes (e.g., cloud service providers, distributors, reseller and enterprise). The following summarizes revenue from unaffiliated customers; income (loss) from operations; total cash, cash equivalents and available-for-sale investment securities and total assets by geographic segment (in thousands):
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Supplemental information about geographic areas The Company approximates its geographic sources of revenue based on the country of origin of its non-cancellable subscription and service agreements initiated during the year (commonly referred to as bookings). The following table lists revenue from unaffiliated customers in the U.S., the Company’s country of domicile, and revenue from foreign countries (in thousands):
Total tangible long-lived assets located in the U.S., the Company’s country of domicile, and similar tangible long-lived assets held outside the U.S. are summarized in the following table (in thousands):
Supplemental information about major customers For each of the three months ended November 30, 2018 and November 30, 2017, the U.S. government and its agencies represented in the aggregate approximately 11% and 10% of the Company’s total revenue, respectively. For each of the nine months ended November 30, 2018 and November 30, 2017, the U.S. government and its agencies represented in the aggregate approximately 10% and 11% of the Company’s total revenue, respectively. Supplemental information about products and services The following table provides further detail, by type, of the Company’s subscription and services revenues. Subscription revenue for infrastructure-related offerings includes subscription revenue generated from Red Hat Enterprise Linux and related technologies such as Red Hat Satellite and Red Hat Virtualization. Subscription revenue generated from the Company’s Application Development-related and other emerging technology offerings includes Red Hat JBoss Middleware, Red Hat OpenShift, Red Hat Cloud Infrastructure, Red Hat OpenStack Platform, Red Hat Ansible Automation, Red Hat CloudForms, Red Hat Storage technologies and Red Hat Mobile Application Platform (in thousands):
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Business Combinations |
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| Business Combinations | Business Combinations Acquisition of Y.G. Noobaa Ltd. On November 27, 2018, the Company completed the acquisition of all of the shares of Y.G. Noobaa Ltd. (“Noobaa”). The addition of Noobaa, an early stage company developing software for managing data storage services, complements and enhances the Company’s portfolio of hybrid cloud technologies, including Red Hat OpenShift Container Platform, Red Hat OpenShift Container Storage and Red Hat Ceph Storage. The consideration paid was $11.6 million in cash. Based on management’s provisional assessment of the acquisition-date fair value of the assets acquired and liabilities assumed, the total consideration transferred of $11.6 million was allocated to the Company’s assets and liabilities on a preliminary basis as follows: $12.0 million to goodwill and $0.4 million to working capital as a net current liability. The Company incurred approximately $0.1 million in transaction costs, including legal and accounting fees, relating to the Noobaa acquisition. These transaction costs have been expensed as incurred and included in General and administrative expense in the Company’s Consolidated Statement of Operations for the three and nine months ended November 30, 2018. Acquisition of CoreOS, Inc. On January 30, 2018, the Company completed the acquisition of all of the shares of CoreOS, Inc. (“CoreOS”). The addition of CoreOS, a provider of Kubernetes and container-native solutions, is expected to further enable the Company’s customers to build and deploy any application in any environment with the flexibility afforded by open source. By combining CoreOS’s complementary capabilities with the Company’s Kubernetes and container-based portfolio, including Red Hat OpenShift, the Company aims to further accelerate adoption and development of its hybrid cloud platform for modern application workloads. During the three months ended November 30, 2018, the Company completed its assessment of the acquisition-date fair value of the assets acquired and liabilities assumed. The total consideration transferred of $238.7 million was allocated to the Company’s assets and liabilities as follows: $159.7 million to goodwill, $81.7 million to identifiable intangible assets and $2.7 million to working capital as a net current liability. Acquisition of Permabit Technology Corporation On July 31, 2017, the Company acquired the assets and technology of Permabit Technology Corporation (“Permabit”), a provider of software for data deduplication, compression and thin provisioning technology. Adding Permabit’s data deduplication and compression capabilities to the Company’s Red Hat Enterprise Linux platform will better enable enterprise digital transformation through more efficient storage options. During the three months ended February 28, 2018, the Company completed its assessment of the acquisition-date fair value of the assets acquired and liabilities assumed. The total consideration transferred of $49.8 million was allocated to the Company’s assets and liabilities as follows: $39.4 million to goodwill, $10.4 million to identifiable intangible assets and a nominal amount to working capital. The goodwill acquired is expected to be deductible for tax purposes. Acquisition of Codenvy S. A. On June 1, 2017, the Company completed its acquisition of all of the shares of Codenvy S.A. (“Codenvy”), a provider of cloud-native development tools that enable developers to more easily create modern container-based and cloud-native applications. By adding Codenvy to its existing portfolio of developer tools and application platforms, including Red Hat JBoss Middleware and Red Hat OpenShift, the Company continues its efforts to provide solutions that enable developers to create applications for hybrid cloud environments. The Company plans to make Codenvy an integral part of OpenShift.io, the Company’s hosted development environment for building hybrid cloud services on OpenShift. During the three months ended November 30, 2017, the Company completed its assessment of the acquisition-date fair value of the assets acquired and liabilities assumed. The total consideration transferred of $34.2 million was allocated to the Company’s assets and liabilities as follows: $25.4 million to goodwill, $11.3 million to identifiable intangible assets and $2.5 million to working capital as a net current liability. Pro forma consolidated financial information The following unaudited pro forma consolidated financial information reflects the results of operations of the Company (in thousands, except per share amounts) as if the acquisitions of CoreOS, Permabit, Codenvy and Noobaa had occurred as of the beginning of the fiscal year prior to the fiscal year of acquisition, after giving effect to certain purchase accounting adjustments. These pro forma results are not necessarily indicative of what the Company’s operating results would have been had the acquisitions actually taken place at the beginning of the fiscal year prior to the fiscal year of acquisition.
Goodwill and other business combinations The following is a summary of goodwill (in thousands):
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Summary of Significant Accounting Policies (Policies) |
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| Basis of presentation | Basis of presentation The unaudited interim consolidated financial statements as of and for the three and nine months ended November 30, 2018 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These consolidated statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary for a fair statement of the consolidated balance sheets, consolidated operating results, consolidated other comprehensive income and consolidated cash flows for the periods presented in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). Operating results for the three and nine months ended November 30, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending February 28, 2019. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the SEC’s rules and regulations for interim reporting. These unaudited financial statements should be read in conjunction with the Company’s Consolidated Financial Statements, including notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2018. Other than the accounting pronouncement adopted during the three months ended May 31, 2018 related to accounting for revenue from contracts with customers as described below, there have been no changes to the Company’s significant accounting policies from those described in NOTE 2—Summary of Significant Accounting Policies to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2018. The Company adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers, now commonly referred to as Accounting Standards Codification Topic 606 (“ASC 606”), effective March 1, 2018, using the full retrospective transition method. All amounts and disclosures set forth in this Form 10-Q have been updated to comply with the new standard and such information is designated “as adjusted.” Certain amounts for the three and nine months ended November 30, 2017 have been reclassified to conform to the current period presentation. The Company’s fiscal year ends on the last day of February, and the Company identifies fiscal years by the calendar years in which they end. For example, the fiscal year ending February 28, 2019 is referred to as “fiscal 2019.”
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| Consolidation policy | Consolidation policyThe accompanying Consolidated Financial Statements include the accounts of the Company and all of its wholly owned subsidiaries. All significant inter-company accounts and transactions are eliminated in consolidation. There are no significant foreign exchange restrictions on the Company’s foreign subsidiaries. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Use of estimates | Use of estimatesThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from such estimates. Estimates are used for, but not limited to, revenue recognition, goodwill and other long-lived assets, share-based compensation, income taxes and loss contingencies. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue recognition | Revenue recognition The Company derives its revenues from subscription contracts and training and service contracts. Revenue is recognized when performance obligations, as stipulated in the contracts, are transferred to a customer for an amount that reflects the consideration the Company expects to receive in exchange for those subscription contracts and training and service contracts. The Company applies the following five steps to recognize revenue: 1) Identify the contract with a customer. The Company determines that it has a contract with a customer when the contract is approved, the party’s rights regarding the products and services to be transferred can be identified, the payment terms for the products and services are identified, the customer’s ability and intent to pay can be determined, and the contract has commercial substance. Judgment is used to assess the customer’s ability and intent to pay, which is based upon factors including the customer’s historical payment experience or credit and financial information pertaining to the customer. 2) Identify the performance obligations in the contract. The Company’s performance obligations are identified based on the products and services that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract and consist of (i) subscription offerings, including non-proprietary open-source software code delivered to the customer, software support subscriptions delivered to the customer, software support subscriptions embedded in partner products and learning subscriptions and (ii) training and services, including professional services sold at a fixed fee, professional services sold on a time-and-material-basis, training courses or units, and consulting units. In limited cases, the option to purchase additional subscription offerings or training and services may be offered at a price representing a material right. In such cases, the option to purchase is considered a distinct performance obligation. 3) Determine the transaction price. The Company determines transaction price based on the consideration expected to be received in exchange for transferring certain performance obligations to the customer. In determining the transaction price, variable consideration, if any, would be considered if, in management’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. The Company’s contracts do not contain significant financing components. Specifically, the Company does not typically extend customer payment terms beyond a standard 30- to 60-day term and as a result the Company has elected the one-year-or-less safe harbor expedient and does not impute any interest. The Company has elected to exclude all taxes from the transaction price (e.g. sales, use, value-added, etc.). Revenue is recognized net of such taxes. 4) Allocate the transaction price to performance obligations in the contract. When a contract contains a single performance obligation, the entire transaction price is allocated to that one performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price (“SSP”). The Company typically determines SSP based on the observable price when the Company sells the subscriptions or training and services separately, taking into consideration the geographical region of the customer, type of offering and sales channel. In instances where SSP is not directly observable, the Company determines SSP either from the renewal rate paid for the performance obligation to the extent it is the same rate as stipulated in the initial customer contract or by using the expected-cost-plus-margin approach. 5) Recognize revenue when or as the performance obligation is satisfied. Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised subscription offerings and training and services to a customer. For each performance obligation, a determination is made as to whether the control is transferred over time or at a point in time. For performance obligations satisfied over time, a method to measure progress toward complete satisfaction is selected, based upon the most faithful depiction of performance. The selected method for each performance obligation type is applied consistently to similar contracts. Subscription revenue Subscription revenue is comprised of direct and indirect sales of subscriptions relating to Red Hat technologies. Accounts receivable and deferred revenue are recorded at the time a customer enters into a binding and non-cancellable subscription agreement for the purchase of a subscription, subscription services are made available to the customer and the customer is billed. The deferred revenue amount is recognized as revenue ratably over the subscription period. Red Hat technologies are generally offered with base subscription periods of either one year or three years; the majority of the Company’s subscriptions have terms of one year. Under these subscription agreements, renewal rates are generally specified for renewal terms of one year or three years. Subscriptions generally entitle the end user to the technology itself and post-contract customer support, generally consisting of varying levels of support services as well as access to security updates, fixes, functionality enhancements, upgrades to the technologies, each on an if and when available basis, and compatibility with an ecosystem of certified hardware and software, during the term of the subscription. The Company sells its offerings through two principal channels: (1) direct, which includes sales by the Company’s sales force as well as web store sales, and (2) indirect, which includes certified cloud and service providers (“CCSPs”), distributors, original equipment manufacturers (“OEMs”), systems integrators and value added resellers. The Company recognizes revenue from the sale of Red Hat technologies ratably over the period of the subscription beginning on the commencement date of the subscription agreement. The Company has determined that the delivery of software code underlying the subscription is a distinct performance obligation as it is both capable of being distinct and is distinct within the context of a customer contract. The Company uses a non-proprietary open-source development and licensing model to provide its software technologies to customers and therefore the amount of transaction price allocated to the underlying software code is negligible. The Company derives a portion of its revenue from CCSPs that provide public clouds with, and allow users to consume, computing resources as a service. The Company earns revenue based on subscription units consumed by the CCSP or its end users. The Company uses its historical cloud-usage data to estimate the amount of revenue earned and recognized each month and adjusts to actual amounts earned upon receipt of usage reports from the CCSPs in the following month. The differences between actual amounts earned and estimates made have generally been insignificant. Training and services revenue Training and services revenue is comprised of revenue for consulting, engineering and customer training courses or units and education services. Consulting services consist of time-based units or fixed-fee arrangements. For time-based arrangements, revenue is recognized over time as these services are performed and for fixed-fee arrangements, revenue is recognized based on the proportion of services performed. Engineering services represent revenue earned under fixed-fee arrangements with the Company’s OEM partners and other customers to provide for significant modification and customization of Red Hat technologies. The Company recognizes revenue for these fixed-fee engineering services based on a proportional performance basis using actual costs incurred to date over the estimated total projected costs, which includes a representative profit margin. A representative profit margin is determined based on analysis of a population of similar contracts by region. Revenue for customer training and education services is recognized on the dates the services are performed. See NOTE 16—Segment Reporting for further information, including revenue by geographic area and significant product and service offerings. Contract Balances Timing of revenue recognition may differ from the timing of invoicing to customers. The Company records a receivable when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. For multi-year arrangements, the Company will generally invoice customers upfront or annually at the beginning of each annual coverage period.
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| Accounts receivable and allowance for doubtful accounts | Accounts receivable and allowance for doubtful accountsTrade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on historical write-off experience and other qualitative factors. The Company reviews its allowance for doubtful accounts monthly. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis by type of receivable. Account balances are charged off against the allowance when the Company determines it is probable the receivable will not be recovered. The Company does not have off-balance sheet credit exposure related to its customers. Unbilled receivables related to subscription and training and services contracts are included in accounts receivable. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred selling costs | Deferred selling costsDeferred commissions are the incremental costs that are directly associated with non-cancellable subscription contracts with customers and consist of sales commissions and certain related fringe benefits earned by the Company’s sales force. The commissions are deferred and amortized on a straight-line basis over a period that approximates the subscription period. In determining the period that approximates the subscription period, the Company utilizes a portfolio approach that allows for the analysis of customer contracts with similar characteristics. The Company has determined that the effects on the financial statements of the portfolio approach would not differ materially from an individual customer contract analysis approach. The commission payments are paid in full subsequent to the month in which the customer’s service commences. The deferred commission amounts are recoverable through the future revenue streams under the non-cancellable customer contracts. In addition, the Company has the ability and intent under the commission plans with its sales force to recover commissions previously paid to its sales force in the event that customers breach the terms of their subscription agreements and do not fully pay for their subscription agreements. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recent accounting pronouncements | Recent accounting pronouncements Accounting pronouncements adopted In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”). The FASB issued ASU 2018-02 to give entities the option to reclassify tax effects stranded in accumulated other comprehensive income as a result of the enactment of the Tax Cuts and Jobs Act (the “Tax Act”) to retained earnings. The Company adopted ASU 2018-02 as of June 1, 2018. The Company opted not to reclassify tax effects stranded in accumulated other comprehensive income as a result of the enactment of the Tax Act to retained earnings. In January 2016, the FASB issued Accounting Standards Update 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). The FASB issued ASU 2016-01 to require equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income. Equity investments that do not have readily determinable fair values are allowed to be remeasured upon the occurrence of an observable price change or upon identification of an impairment. Along with ASU 2016-01, the Company evaluated the Accounting Standards Update 2018-03, Technical Corrections and Improvements to Financial Instruments Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2018-03”), which was issued in February 2018, and Accounting Standards Update 2018-04, Investments—Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273 (“ASU 2018-04”), which was issued in March 2018. The Company adopted ASU 2016-01, ASU 2018-03 and ASU 2018-04 as of March 1, 2018. The adoption of these standards did not significantly impact the Company’s Consolidated Financial Statements. In May 2014, the FASB issued ASC 606 to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance. ASC 606 requires the recognition of revenue when control of performance obligations as stipulated in the contracts, is transferred to a customer for an amount that reflects the consideration the entity expects to receive in exchange promised goods and services. The standard also includes Subtopic 340-40, Other Assets and Deferred Costs—Contracts with Customers, which requires the deferral of incremental costs of obtaining a contract with a customer. Collectively, ASC 606 and Subtopic 340-40 are referred to as “ASC 606.” The Company adopted ASC 606 as of March 1, 2018, utilizing the full retrospective method of transition, which requires a restatement of each prior reporting period presented. In adopting ASC 606, the Company used the practical expedient where the transaction price allocated to the remaining performance obligations before the date of the initial application is not disclosed. The Company implemented new policies, processes and systems to enable both the preparation of financial information and internal controls over financial reporting in connection with its adoption of ASC 606. The impact of adopting ASC 606 on the Company’s fiscal 2018 and fiscal 2017 revenue was not material. The primary impact of adopting the standard related to the deferral of incremental commission and other costs of obtaining contracts with customers. Previously, the Company deferred direct and incremental commission costs to obtain a contract and amortized those costs on a straight-line basis over a period that approximated the subscription period, and under ASC 606, the Company now also defers related fringe benefit costs. Select adjusted unaudited financial statement information, which reflects the Company’s adoption of ASC 606, is set forth below. Consolidated balance sheets (in thousands):
Consolidated statements of operations (in thousands, except per share amounts):
The Company’s adoption of ASC 606 had no impact on net cash provided by or used in operating, investing or financing activities for any of the periods reported. Accounting pronouncements being evaluated In August 2018, the FASB issued Accounting Standards Update 2018-15, Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) (“ASU 2018-15”). The FASB issued ASU 2018-15 to align the requirements for capitalizing implementation costs in a cloud computing arrangement service contract with the requirements for capitalizing implementation costs incurred for an internal-use software license. The guidance is effective for the Company as of the first quarter of its fiscal year ending February 28, 2021, with early adoption permitted. The Company is currently evaluating the impact that this updated standard will have on its consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842) (“ASU 2016-02”). The FASB issued ASU 2016-02 to increase transparency and comparability among organizations with respect to accounting for leases. Under ASU 2016-02, lessees will recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. This guidance is effective for the Company as of the first quarter of its fiscal year ending February 28, 2020. Along with ASU 2016-02, the Company is also evaluating Accounting Standards Update 2018-10, Codification Improvements to Topic 842 Leases (“ASU 2018-10”) and Accounting Standards Update 2018-11, Targeted Improvements to Topic 842 Leases (“ASU 2018-11”). The Company expects to adopt the transition method, which will not require adjustments to comparative periods nor require modified disclosures in those comparative periods. Upon adoption, the Company expects to elect the transition package of practical expedients permitted within the new standard, which among other things, allows the carryforward of the historical lease classification. Further, upon implementation of the new guidance, the Company intends to elect the practical expedients to combine lease and non-lease components for all asset classes, to not recognize right-of-use assets and lease liabilities for short-term leases for all asset classes and to use hindsight in determining the lease term and assessing impairment of right-of-use assets. The Company continues to assess the impact of ASU 2016-02, ASU 2018-10 and ASU 2018-11, now commonly referred to as Accounting Standards Codification Topic 842 (“ASC 842”), including for example, any potential changes to and investments in the Company’s policies, processes, systems and internal controls over financial reporting that may be required to comply with the new guidance related to identifying and measuring right-of-use assets and lease liabilities. While the Company continues to evaluate the effect of adopting this guidance on its consolidated financial statements and related disclosures, it is expected that the operating leases, as disclosed in NOTE 13—Commitments and Contingencies contained in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2018, will be reported in the consolidated balance sheets upon adoption.
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| Identifiable Intangible Assets | Identifiable intangible assets consist primarily of trademarks, copyrights and patents, purchased technologies, customer and reseller relationships and covenants not to compete, all of which are amortized over the estimated useful life, generally on a straight-line basis, with the exception of customer and reseller relationships, which are generally amortized over the greater of straight-line over the estimated useful life or the related asset’s pattern of economic benefit. Useful lives range from two years to 10 years. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments | The Company transacts business in various foreign countries and is, therefore, subject to risk of foreign currency exchange rate fluctuations. From time to time, the Company enters into forward contracts to economically hedge transactional exposure associated with commitments arising from trade accounts receivable, trade accounts payable and fixed purchase obligations denominated in a currency other than the functional currency of the respective operating entity. All derivative instruments are recorded in the Consolidated Balance Sheets at their respective fair values. The Company has elected not to prepare and maintain the documentation required to qualify for hedge accounting treatment and, therefore, changes in fair value are recorded in the Consolidated Statements of Operations. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share Based Awards | The Company measures share-based compensation cost at the grant date, based on the estimated fair value of the award and recognizes the cost over the employee requisite service period, typically on a straight-line basis. The Company estimates the fair value of stock options using the Black-Scholes-Merton valuation model. The fair value of nonvested share awards, nonvested share units and performance share units are measured at their underlying closing share price on the day of grant. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets and Liabilities Measured at Fair Value on a Recurring Basis | Fair value is defined as the exchange price that would be received for the purchase of an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for such asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3—Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. The Company’s investments are comprised primarily of debt securities that are classified as available for sale and recorded at their fair values. Liquid investments with effective maturities of three months or less at the date of purchase are classified as cash equivalents. Investments with remaining effective maturities of twelve months or less from the balance sheet date are classified as short-term investments. Investments with remaining effective maturities of more than twelve months from the balance sheet date are classified as long-term investments. The Company’s Level 1 financial instruments are valued using quoted prices in active markets for identical instruments. The Company’s Level 2 financial instruments, including derivative instruments, are valued using quoted prices for identical instruments in less active markets or using other observable market inputs for comparable instruments. Unrealized gains and temporary losses on investments classified as available for sale are included within accumulated other comprehensive income, net of any related tax effect. Realized gains and losses are recorded using the specific identification method and upon realization, such amounts are reclassified from accumulated other comprehensive income to Other expense, net. Realized gains and losses and other than temporary impairments, if any, are reflected in the Company’s Consolidated Statements of Operations as Other expense, net. The Company does not recognize changes in the fair value of its investments in income unless a decline in value is considered other than temporary. The vast majority of the Company’s investments are priced by pricing vendors. These pricing vendors use the most recent observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs. In the event observable inputs are not available, the Company assesses other factors to determine the security’s fair value, including broker quotes or model valuations. Independent price verifications of all holdings are performed by pricing vendors that are then reviewed by the Company. In the event a price fails a pre-established tolerance check, it is researched so that the Company can assess the cause of the variance to determine what the Company believes is the appropriate fair value. The Company minimizes its credit risk associated with investments by investing primarily in investment-grade, liquid securities. The Company’s policy is designed to limit exposures to any one issuer depending on credit quality. Periodic evaluations of the relative credit standing of those issuers are considered in the Company’s investment strategy.
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Summary of Significant Accounting Policies (Tables) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of New Accounting Pronouncements and Changes in Accounting Principles | Select adjusted unaudited financial statement information, which reflects the Company’s adoption of ASC 606, is set forth below. Consolidated balance sheets (in thousands):
Consolidated statements of operations (in thousands, except per share amounts):
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Accounts Receivable (Tables) |
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| Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Credit Losses for Financing Receivables, Current | Accounts receivable are presented net of an allowance for doubtful accounts. Activity in the Company’s allowance for doubtful accounts is presented in the following table (in thousands):
_______________ (1) Represents foreign currency translation adjustments and amounts written-off as uncollectible accounts receivable.
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Identifiable Intangible Assets (Tables) |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Finite-Lived Intangible Assets | The following is a summary of identifiable intangible assets (in thousands):
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| Schedule of Amortization Expense Associated with Identifiable Intangible Assets | Amortization expense associated with identifiable intangible assets recognized in the Company’s Consolidated Financial Statements is summarized as follows (in thousands):
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Deferred Selling Costs (Tables) |
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| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Deferred Sales Commissions | Current and non-current deferred commissions are included in Prepaid expenses and Other assets, respectively, in the Company’s Consolidated Balance Sheets and are as follows (in thousands):
____________________
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Derivative Instruments (Tables) |
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Effects of Derivative Instruments | The effects of derivative instruments on the Company’s Consolidated Financial Statements are as follows (in thousands):
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Convertible Notes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Components of Convertible Notes | The convertible notes consisted of the following (in thousands):
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| Schedule of Total Interest Expense Recognized Related to Convertible Notes | The following table includes total interest expense recognized related to the convertible notes (in thousands):
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| Summary of Fair Value of Convertible Notes and Carrying Value of Convertible Notes | The fair value of the convertible notes, which was determined based on inputs that are observable in the market (Level 2), and the carrying value of convertible notes (the carrying value excludes the equity component of the convertible notes classified in equity) is as follows (in thousands):
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Stockholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Changes in Stockholders' Equity | The following table summarizes the changes in the Company’s stockholders’ equity during the three months ended November 30, 2018 (in thousands):
The following table summarizes the changes in the Company’s stockholders’ equity during the three months ended November 30, 2017 (in thousands):
____________________ (1) As adjusted to reflect the impact of the retrospective application of ASC 606. See NOTE 2—Summary of Significant Accounting Policies for detailed information on adoption of ASC 606.The following table summarizes the changes in the Company’s stockholders’ equity during the nine months ended November 30, 2018 (in thousands):
____________________
The following table summarizes the changes in the Company’s stockholders’ equity during the nine months ended November 30, 2017 (in thousands):
____________________ (1) As adjusted to reflect the impact of the retrospective application of ASC 606. See NOTE 2—Summary of Significant Accounting Policies for detailed information on adoption of ASC 606.
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| Summary of Accumulated Other Comprehensive Loss | Accumulated other comprehensive loss was comprised of the following (in thousands):
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Deferred Revenue and Performance Obligations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contract with Customer, Asset and Liability | Activity in the Company’s deferred revenue accounts is presented in the following table (in thousands):
____________________
(2) Includes revenue recognized from current period customer contracts and the impact from foreign currency exchange rate fluctuations.
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Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of Numerators and Denominators of Earnings Per Share Calculation | The following table reconciles the numerators and denominators of the earnings per share (“EPS”) calculation (in thousands, except per share amounts):
____________________ (1) As adjusted to reflect the impact of the retrospective application of ASC 606. See NOTE 2—Summary of Significant Accounting Policies for detailed information on adoption of ASC 606.
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| Shares Considered Anti-Dilutive for Calculating Diluted EPS | The following share awards are not included in the computation of diluted EPS because the aggregate value of proceeds considered received upon either exercise or vesting was greater than the average market price of the Company’s common stock during the related periods and the effect of including such share awards in the computation would be anti-dilutive (in thousands):
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Share-based Awards (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Compensation Expense | The following summarizes share-based compensation expense recognized in the Company’s Consolidated Financial Statements (in thousands):
__________ (1) Total share-based compensation expense included $4.2 million and $2.9 million, respectively, of expense related to the Company’s employee stock purchase plan (“ESPP”) for the three months ended November 30, 2018 and November 30, 2017 and $12.0 million and $8.8 million, respectively, for the nine months ended November 30, 2018 and November 30, 2017.
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| Summary of Share-Based Awards Granted During Period | The following table summarizes the Company’s share-based awards granted, by type:
__________
(2) Certain executives were granted restricted stock awards. These shares were awarded subject to the achievement of a specified dollar amount of revenue for the fiscal year ending February 28, 2019 (the “RSA Performance Goal”). If the Company fails to achieve the RSA Performance Goal, then all such shares are forfeited. If the Company achieves the RSA Performance Goal, then 25% of the restricted stock vests on or about July 16, 2019, and the remainder vests ratably on a quarterly basis over the course of the subsequent three years, provided that the grantee’s business relationship with the Company has not ceased.
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Assets and Liabilities Measured at Fair Value on a Recurring Basis (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value of Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table summarizes the composition and fair value hierarchy of the Company’s financial assets and liabilities at November 30, 2018 (in thousands):
__________
The following table summarizes the composition and fair value hierarchy of the Company’s financial assets and liabilities at February 28, 2018 (in thousands):
__________
(3) Included in Accounts payable and accrued expenses in the Company’s Consolidated Balance Sheet at February 28, 2018.
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| Investments Measured at Fair Value | The following table represents the Company’s investments measured at fair value as of February 28, 2018 (in thousands):
__________ (1) As of February 28, 2018, there were $4.4 million of accumulated unrealized losses related to investments that have been in a continuous unrealized loss position for 12 months or longer. The aggregate related fair value of investments with unrealized losses was $515.4 million.The following table represents the Company’s investments measured at fair value as of November 30, 2018 (in thousands):
__________ (1) As of November 30, 2018, there were $4.6 million of accumulated unrealized losses related to investments that have been in a continuous unrealized loss position for 12 months or longer. The aggregate related fair value of investments with unrealized losses was $436.2 million.
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| Summary of Stated Maturities of Investment in Debt Securities | The following table summarizes the stated maturities of the Company’s investment in available-for-sale securities (in thousands):
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Segment Reporting (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Revenue, Income (Loss) from Operations, Total Assets and Total Cash, Cash Equivalents and Available-for-Sale Investment Securities by Geographic Segment | The following summarizes revenue from unaffiliated customers; income (loss) from operations; total cash, cash equivalents and available-for-sale investment securities and total assets by geographic segment (in thousands):
_______________
(2) As adjusted to reflect the impact of the retrospective adoption of ASC 606. See NOTE 2—Summary of Significant Accounting Policies for detailed information on adoption of ASC 606.
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| Summary of Revenue from Unaffiliated Customers | The Company approximates its geographic sources of revenue based on the country of origin of its non-cancellable subscription and service agreements initiated during the year (commonly referred to as bookings). The following table lists revenue from unaffiliated customers in the U.S., the Company’s country of domicile, and revenue from foreign countries (in thousands):
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| Summary of Tangible Long-Lived Assets | Total tangible long-lived assets located in the U.S., the Company’s country of domicile, and similar tangible long-lived assets held outside the U.S. are summarized in the following table (in thousands):
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| Summary of Subscription Revenue and Services by Technology Classes | The following table provides further detail, by type, of the Company’s subscription and services revenues. Subscription revenue for infrastructure-related offerings includes subscription revenue generated from Red Hat Enterprise Linux and related technologies such as Red Hat Satellite and Red Hat Virtualization. Subscription revenue generated from the Company’s Application Development-related and other emerging technology offerings includes Red Hat JBoss Middleware, Red Hat OpenShift, Red Hat Cloud Infrastructure, Red Hat OpenStack Platform, Red Hat Ansible Automation, Red Hat CloudForms, Red Hat Storage technologies and Red Hat Mobile Application Platform (in thousands):
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Business Combinations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Acquisition, Pro Forma Information | The following unaudited pro forma consolidated financial information reflects the results of operations of the Company (in thousands, except per share amounts) as if the acquisitions of CoreOS, Permabit, Codenvy and Noobaa had occurred as of the beginning of the fiscal year prior to the fiscal year of acquisition, after giving effect to certain purchase accounting adjustments. These pro forma results are not necessarily indicative of what the Company’s operating results would have been had the acquisitions actually taken place at the beginning of the fiscal year prior to the fiscal year of acquisition.
|
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| Summary of Changes in Goodwill | The following is a summary of goodwill (in thousands):
|
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Company Merger Agreement (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2018 |
Oct. 28, 2018 |
Feb. 28, 2018 |
|
| Business Acquisition [Line Items] | ||||
| Common Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 |
| Merger with IBM | ||||
| Business Acquisition [Line Items] | ||||
| Business Acquisition, Share Price (in dollars per share) | $ 190.00 | |||
| Business Combination, Acquisition Related Costs | $ 27.9 | $ 27.9 |
Summary of Significant Accounting Policies - Narrative (Detail) |
9 Months Ended |
|---|---|
Nov. 30, 2018 | |
| Minimum | |
| Disaggregation of Revenue [Line Items] | |
| Contract payment terms | 30 days |
| Maximum | |
| Disaggregation of Revenue [Line Items] | |
| Contract payment terms | 60 days |
| Base Subscription [Member] | |
| Disaggregation of Revenue [Line Items] | |
| Revenue Recognition Customer Contract Period Minimum | 1 year |
| Revenue Recognition Customer Contract Period Maximum | 3 years |
| Renewal [Member] | |
| Disaggregation of Revenue [Line Items] | |
| Revenue Recognition Customer Contract Period Minimum | 1 year |
| Revenue Recognition Customer Contract Period Maximum | 3 years |
Summary of Significant Accounting Policies - Summary of Consolidated Balance Sheets Adjustments (Detail) - USD ($) $ in Thousands |
Nov. 30, 2018 |
Feb. 28, 2018 |
|||
|---|---|---|---|---|---|
| Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
| Prepaid expenses | $ 241,145 | $ 267,197 | [1] | ||
| Deferred tax assets, net | 80,958 | 92,606 | [1] | ||
| Other assets, net | 71,330 | 89,460 | [1] | ||
| Accounts payable and accrued expenses | 432,662 | 427,139 | [1] | ||
| Retained earnings | $ 1,914,574 | 1,619,688 | [1] | ||
| As Reported | |||||
| Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
| Prepaid expenses | 260,092 | ||||
| Deferred tax assets, net | 93,300 | ||||
| Other assets, net | 87,924 | ||||
| Accounts payable and accrued expenses | 427,086 | ||||
| Retained earnings | 1,611,794 | ||||
| Adjustments | Accounting Standards Update 2014-09 | |||||
| Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
| Prepaid expenses | 7,105 | ||||
| Deferred tax assets, net | (694) | ||||
| Other assets, net | 1,536 | ||||
| Accounts payable and accrued expenses | 53 | ||||
| Retained earnings | $ 7,894 | ||||
| |||||
Summary of Significant Accounting Policies - Summary of Consolidated Statements of Operations Adjustments (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Nov. 30, 2018 |
Nov. 30, 2017 |
|||||||||||
| Operating expense: | ||||||||||||||
| Sales and marketing | $ 353,592 | $ 308,083 | [1] | $ 1,036,787 | $ 880,723 | [1] | ||||||||
| Net income | $ 94,450 | $ 101,609 | [1],[2],[3],[4] | $ 294,494 | $ 274,011 | [1],[2],[3],[4] | ||||||||
| Net income per share: | ||||||||||||||
| Basic (in dollars per share) | $ 0.54 | $ 0.57 | [1] | $ 1.67 | $ 1.55 | [1] | ||||||||
| Diluted (in dollars per share) | $ 0.51 | $ 0.55 | [1],[2] | $ 1.57 | $ 1.49 | [1],[2] | ||||||||
| Adjustments | Accounting Standards Update 2014-09 | ||||||||||||||
| Operating expense: | ||||||||||||||
| Sales and marketing | $ (305) | $ (2,672) | ||||||||||||
| Net income | $ 303 | $ 2,656 | ||||||||||||
| Net income per share: | ||||||||||||||
| Basic (in dollars per share) | $ 0 | $ 0.02 | ||||||||||||
| Diluted (in dollars per share) | $ 0.01 | $ 0.01 | ||||||||||||
| As Reported | ||||||||||||||
| Operating expense: | ||||||||||||||
| Sales and marketing | $ 308,388 | $ 883,395 | ||||||||||||
| Net income | $ 101,306 | $ 271,355 | ||||||||||||
| Net income per share: | ||||||||||||||
| Basic (in dollars per share) | $ 0.57 | $ 1.53 | ||||||||||||
| Diluted (in dollars per share) | $ 0.54 | $ 1.48 | ||||||||||||
| ||||||||||||||
Accounts Receivable (Detail) $ in Thousands |
9 Months Ended | 12 Months Ended | ||||
|---|---|---|---|---|---|---|
|
Nov. 30, 2018
USD ($)
|
Feb. 28, 2018
USD ($)
|
|||||
| Allowance for Doubtful Accounts Receivable [Roll Forward] | ||||||
| Balance at beginning of period | $ 2,167 | $ 2,791 | ||||
| Charged to (recovery of) expense | 1,405 | 172 | ||||
| Adjustments | (767) | [1] | (796) | [1] | ||
| Balance at end of period | 2,805 | 2,167 | ||||
| Unbilled contracts receivable | $ 35,100 | $ 25,800 | ||||
| ||||||
Identifiable Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions |
9 Months Ended | |
|---|---|---|
Nov. 30, 2018 |
Feb. 28, 2018 |
|
| Acquired Finite-Lived Intangible Assets [Line Items] | ||
| Carrying amount for trademarks with an indefinite estimated useful life | $ 11.4 | $ 12.0 |
| Minimum | ||
| Acquired Finite-Lived Intangible Assets [Line Items] | ||
| Total identified intangible assets, useful life (in years) | 2 years | |
| Maximum | ||
| Acquired Finite-Lived Intangible Assets [Line Items] | ||
| Total identified intangible assets, useful life (in years) | 10 years |
Identifiable Intangible Assets - Schedule of Identifiable Intangible Assets (Detail) - USD ($) $ in Thousands |
Nov. 30, 2018 |
Feb. 28, 2018 |
|||
|---|---|---|---|---|---|
| Finite-Lived Intangible Assets [Line Items] | |||||
| Gross Amount | $ 512,993 | $ 505,871 | |||
| Accumulated Amortization | (309,380) | (280,918) | |||
| Net Amount | 203,613 | 224,953 | [1] | ||
| Trademarks, copyrights and patents | |||||
| Finite-Lived Intangible Assets [Line Items] | |||||
| Gross Amount | 172,633 | 167,005 | |||
| Accumulated Amortization | (79,824) | (70,749) | |||
| Net Amount | 92,809 | 96,256 | |||
| Purchased technologies | |||||
| Finite-Lived Intangible Assets [Line Items] | |||||
| Gross Amount | 209,984 | 208,096 | |||
| Accumulated Amortization | (107,936) | (93,748) | |||
| Net Amount | 102,048 | 114,348 | |||
| Customer and reseller relationships | |||||
| Finite-Lived Intangible Assets [Line Items] | |||||
| Gross Amount | 105,748 | 106,076 | |||
| Accumulated Amortization | (99,498) | (95,558) | |||
| Net Amount | 6,250 | 10,518 | |||
| Covenants not to compete | |||||
| Finite-Lived Intangible Assets [Line Items] | |||||
| Gross Amount | 15,795 | 15,861 | |||
| Accumulated Amortization | (14,551) | (14,324) | |||
| Net Amount | 1,244 | 1,537 | |||
| Other intangible assets | |||||
| Finite-Lived Intangible Assets [Line Items] | |||||
| Gross Amount | 8,833 | 8,833 | |||
| Accumulated Amortization | (7,571) | (6,539) | |||
| Net Amount | $ 1,262 | $ 2,294 | |||
| |||||
Identifiable Intangible Assets - Schedule of Amortization Expense Associated with Identifiable Intangible Assets (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Nov. 30, 2018 |
Nov. 30, 2017 |
|
| Finite-Lived Intangible Assets [Line Items] | ||||
| Total amortization expense | $ 10,025 | $ 8,384 | $ 30,313 | $ 24,398 |
| Cost of revenue | ||||
| Finite-Lived Intangible Assets [Line Items] | ||||
| Total amortization expense | 6,209 | 4,674 | 18,913 | 13,524 |
| Sales and marketing | ||||
| Finite-Lived Intangible Assets [Line Items] | ||||
| Total amortization expense | 1,396 | 1,592 | 4,158 | 4,634 |
| Research and development | ||||
| Finite-Lived Intangible Assets [Line Items] | ||||
| Total amortization expense | 34 | 34 | 103 | 103 |
| General and administrative | ||||
| Finite-Lived Intangible Assets [Line Items] | ||||
| Total amortization expense | $ 2,386 | $ 2,084 | $ 7,139 | $ 6,137 |
Deferred Selling Costs (Detail) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Nov. 30, 2018 |
Nov. 30, 2017 |
Feb. 28, 2018 |
[1] | |||
| Revenue from Contract with Customer [Abstract] | ||||||||
| Deferred commissions, current | $ 174,477,000 | $ 174,477,000 | $ 188,944,000 | |||||
| Deferred commissions, non-current | 35,210,000 | 35,210,000 | 48,653,000 | |||||
| Total deferred commissions | 209,687,000 | 209,687,000 | $ 237,597,000 | |||||
| Amortization expense | 55,100,000 | $ 46,700,000 | 174,800,000 | $ 132,000,000.0 | ||||
| Impairment loss | $ 0 | $ 0 | $ 0 | $ 0 | ||||
| ||||||||
Derivative Instruments (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Nov. 30, 2018 |
Nov. 30, 2017 |
|
| Derivative [Line Items] | ||||
| Total, Fair Value | $ 2 | $ (18) | $ 2 | $ (18) |
| Notional value of foreign currency forward contracts not designated as hedges | 89,984 | 55,604 | 89,984 | 55,604 |
| Amount of unrealized gain (loss) recognized in income on derivatives | (372) | (369) | (1,251) | 328 |
| Other current assets | ||||
| Derivative [Line Items] | ||||
| Assets—foreign currency forward contracts not designated as hedges | 154 | 156 | 154 | 156 |
| Notional value of foreign currency forward contracts not designated as hedges, assets | 68,036 | 20,394 | 68,036 | 20,394 |
| Accounts payable and accrued expenses | ||||
| Derivative [Line Items] | ||||
| Liabilities—foreign currency forward contracts not designated as hedges | (152) | (174) | (152) | (174) |
| Notional value of foreign currency forward contracts not designated as hedges, liabilities | 21,948 | 35,210 | 21,948 | 35,210 |
| Derivative Liabilities | Other expense, net | ||||
| Derivative [Line Items] | ||||
| Amount of unrealized gain (loss) recognized in income on derivatives | (610) | (678) | (2,060) | (1,261) |
| Derivative Assets | Other expense, net | ||||
| Derivative [Line Items] | ||||
| Amount of unrealized gain (loss) recognized in income on derivatives | $ 238 | $ 309 | $ 809 | $ 1,589 |
Income Taxes (Detail) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Nov. 30, 2018 |
Nov. 30, 2017 |
|||||
| Income Taxes [Line Items] | ||||||||
| Tax Cuts and Jobs Act of 2017, Incomplete Accounting, Provisional Income Tax Expense (Benefit) | $ 18.0 | $ 18.0 | ||||||
| Effective tax rate | 15.30% | 12.60% | [1] | 17.80% | 18.30% | [1] | ||
| Federal statutory rate | 21.00% | 35.00% | 21.00% | 35.00% | ||||
| Net discrete tax benefits | $ 6.5 | $ 15.5 | $ 17.6 | $ 28.5 | ||||
| Decrease in unrecognized tax benefits | $ 1.0 | $ 1.0 | ||||||
| Significant change in unrecognized tax benefits, nature of event | as a result of statute of limitation expirations in various tax jurisdictions | |||||||
| ||||||||
Convertible Notes - Additional Information (Detail) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
|
Jan. 02, 2019
USD ($)
|
Oct. 07, 2014
USD ($)
day
$ / shares
|
Oct. 01, 2014
USD ($)
$ / shares
shares
|
Feb. 28, 2019
USD ($)
|
Nov. 30, 2018
USD ($)
$ / shares
shares
|
Nov. 30, 2018
USD ($)
$ / shares
|
Feb. 28, 2018
USD ($)
|
[1] |
Nov. 30, 2017
$ / shares
|
|||
| Debt Instrument [Line Items] | |||||||||||
| Convertible threshold, trading days | day | 20 | ||||||||||
| Convertible threshold, consecutive trading days | day | 30 | ||||||||||
| Percentage of stock price trigger | 130.00% | ||||||||||
| Stock price trigger (in dollars per share) | $ / shares | $ 95.43 | ||||||||||
| Closing price of common stock (in dollars per share) | $ / shares | $ 178.56 | $ 178.56 | |||||||||
| If-converted value in excess of principal | $ 758,900 | ||||||||||
| Convertible notes, current | $ 191,972 | $ 191,972 | $ 23,806 | ||||||||
| Strike price of warrants (in dollars per share) | $ / shares | $ 101.65 | $ 101.65 | $ 101.65 | $ 101.65 | |||||||
| Purchase of convertible note hedges | $ 148,000 | ||||||||||
| Proceeds from issuance of warrants | $ 79,800 | ||||||||||
| Number of shares of common stock underlying the warrants | shares | 10,965,630 | ||||||||||
| Fundamental Change | |||||||||||
| Debt Instrument [Line Items] | |||||||||||
| Repurchase of note principal amount | 100.00% | ||||||||||
| Default | |||||||||||
| Debt Instrument [Line Items] | |||||||||||
| Repurchase of note principal amount | 100.00% | ||||||||||
| Ownership percentage of outstanding principal amount | 25.00% | ||||||||||
| 0.25% Convertible Senior Notes due 2019 | |||||||||||
| Debt Instrument [Line Items] | |||||||||||
| Debt instrument, face amount | $ 805,000 | ||||||||||
| Debt instrument, interest rate | 0.25% | 0.25% | 0.25% | ||||||||
| Converted instrument, amount | $ 4,600 | $ 275,100 | |||||||||
| Converted instrument, shares issued (in shares) | shares | 30,257 | ||||||||||
| Loss on settled conversions | $ 1,700 | ||||||||||
| Options exercised under convertible note hedge transaction (in shares) | shares | 30,249 | ||||||||||
| 0.25% Convertible Senior Notes due 2019 | Unsecured Debt | |||||||||||
| Debt Instrument [Line Items] | |||||||||||
| Debt instrument, offering date | Oct. 01, 2014 | ||||||||||
| Debt instrument, interest rate | 0.25% | ||||||||||
| Frequency of interest payment | semiannually in arrears on April 1 and October 1 of each year, beginning on April 1, 2015. | ||||||||||
| Debt instrument, maturity date | Oct. 01, 2019 | ||||||||||
| Common stock conversion rate | 0.0136219 | ||||||||||
| Debt instrument, convertible, conversion price (in dollars per share) | $ / shares | $ 73.41 | $ 73.41 | |||||||||
| Forecast | 0.25% Convertible Senior Notes due 2019 | |||||||||||
| Debt Instrument [Line Items] | |||||||||||
| Converted instrument, amount | $ 197,100 | ||||||||||
| Subsequent Event | 0.25% Convertible Senior Notes due 2019 | |||||||||||
| Debt Instrument [Line Items] | |||||||||||
| Instrument conversion requests, amount | $ 26,400 | ||||||||||
| Future principal amount of convertible debt | $ 306,400 | ||||||||||
| |||||||||||
Convertible Notes - Components of Convertible Notes (Detail) - USD ($) $ in Thousands |
Nov. 30, 2018 |
Feb. 28, 2018 |
|||||
|---|---|---|---|---|---|---|---|
| Liability Component [Abstract] | |||||||
| Net carrying amount | $ 324,153 | $ 744,194 | [1] | ||||
| Unsecured Debt | 0.25% Convertible Senior Notes due 2019 | |||||||
| Liability Component [Abstract] | |||||||
| Principal | 529,865 | 804,966 | |||||
| Less: debt issuance costs | (2,448) | (4,695) | |||||
| Less: debt discount | (11,292) | (32,271) | |||||
| Net carrying amount | 516,125 | 768,000 | |||||
| Equity component | [2] | $ 63,775 | $ 96,890 | ||||
| |||||||
Convertible Notes - Interest Expense Related to Convertible Notes (Detail) - 0.25% Convertible Senior Notes due 2019 - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Nov. 30, 2018 |
Nov. 30, 2017 |
|
| Debt Instrument [Line Items] | ||||
| Coupon rate 0.25% per year, payable semiannually | $ 250 | $ 503 | $ 935 | $ 1,509 |
| Amortization of convertible note issuance costs — liability component | 715 | 694 | 2,247 | 2,047 |
| Accretion of debt discount | 3,347 | 4,936 | 12,223 | 14,693 |
| Total interest expense related to convertible notes | $ 4,312 | $ 6,133 | $ 15,405 | $ 18,249 |
| Coupon rate per year | 0.25% | 0.25% | 0.25% | 0.25% |
Convertible Notes - Fair Value of Notes Based on Inputs Observable in Market (Level 2) and Carrying Value of Debt Instruments (Detail) - USD ($) $ in Thousands |
Nov. 30, 2018 |
Feb. 28, 2018 |
|||
|---|---|---|---|---|---|
| Debt Instrument [Line Items] | |||||
| Carrying value, convertible notes | $ 324,153 | $ 744,194 | [1] | ||
| Level 2 | |||||
| Debt Instrument [Line Items] | |||||
| Fair value, convertible notes | 517,228 | ||||
| Unsecured Debt | 0.25% Convertible Senior Notes due 2019 | |||||
| Debt Instrument [Line Items] | |||||
| Carrying value, convertible notes | $ 516,125 | $ 768,000 | |||
| |||||
Commitments and Contingencies (Detail) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Nov. 30, 2018 |
Nov. 30, 2017 |
|
| Commitments and Contingencies Disclosure [Abstract] | ||||
| Rent expense under operating leases | $ 14.8 | $ 12.9 | $ 41.9 | $ 38.1 |
Stockholders' Equity - Summary of Changes in Stockholders' Equity (Detail) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Nov. 30, 2018 |
Nov. 30, 2017 |
Aug. 31, 2018 |
Feb. 28, 2018 |
Aug. 31, 2017 |
Feb. 28, 2017 |
|||||||||||||||||
| Changes in Stockholders' Equity | ||||||||||||||||||||||||
| Beginning Balance | $ 1,289,804 | $ 1,407,546 | $ 1,478,124 | [1] | $ 1,252,166 | |||||||||||||||||||
| Net income | 94,450 | 101,609 | [2],[3],[4],[5] | 294,494 | 274,011 | [2],[3],[4],[5] | ||||||||||||||||||
| Other comprehensive income (loss), net of tax | 4,499 | (2,719) | [5] | (14,541) | 52,457 | [5] | ||||||||||||||||||
| Vest and exercise of share-based awards | 767 | 711 | 1,831 | 4,541 | ||||||||||||||||||||
| Common stock repurchase | (12,791) | (100,000) | (412,845) | (237,002) | ||||||||||||||||||||
| Share-based compensation expense | 56,278 | 52,318 | 154,969 | 142,983 | ||||||||||||||||||||
| Minimum tax withholdings paid by the Company on behalf of employees related to net settlement of employee share-based awards | (32,873) | (37,807) | (127,605) | (86,230) | ||||||||||||||||||||
| Re-issuance of treasury stock under employee stock purchase plan | 23,619 | 18,984 | 55,830 | 42,732 | ||||||||||||||||||||
| Convertible note conversions | (123) | (7,034) | ||||||||||||||||||||||
| Exercises of convertible note hedges | 16 | |||||||||||||||||||||||
| Exercise of convertible note hedges | 1 | |||||||||||||||||||||||
| Other adjustments | 0 | (5,016) | ||||||||||||||||||||||
| Ending Balance | 1,423,631 | 1,440,642 | 1,423,631 | 1,440,642 | ||||||||||||||||||||
| Cumulative Effect of New Accounting Principle in Period of Adoption | 392 | 392 | ||||||||||||||||||||||
| Common Stock | ||||||||||||||||||||||||
| Changes in Stockholders' Equity | ||||||||||||||||||||||||
| Beginning Balance | $ 24 | $ 24 | $ 24 | $ 24 | ||||||||||||||||||||
| Vest and exercise of share-based awards (shares) | 791 | 640 | 1,931 | 1,813 | ||||||||||||||||||||
| Vest and exercise of share-based awards | $ 0 | |||||||||||||||||||||||
| Convertible note conversions (shares) | 30 | 1,990 | ||||||||||||||||||||||
| Shares, Issued | 242,610 | 238,618 | 242,610 | 238,618 | 241,789 | 238,689 | 237,978 | 236,805 | ||||||||||||||||
| Ending Balance | $ 24 | $ 24 | $ 24 | $ 24 | ||||||||||||||||||||
| Additional Paid-In Capital | ||||||||||||||||||||||||
| Changes in Stockholders' Equity | ||||||||||||||||||||||||
| Beginning Balance | 2,576,560 | 2,335,518 | 2,416,080 | 2,294,462 | ||||||||||||||||||||
| Vest and exercise of share-based awards | 767 | 711 | 1,831 | 4,541 | ||||||||||||||||||||
| Common stock repurchase | 0 | 0 | ||||||||||||||||||||||
| Share-based compensation expense | 56,278 | 52,318 | 154,969 | 142,983 | ||||||||||||||||||||
| Minimum tax withholdings paid by the Company on behalf of employees related to net settlement of employee share-based awards | (32,873) | (37,807) | (127,605) | (86,230) | [4] | |||||||||||||||||||
| Re-issuance of treasury stock under employee stock purchase plan | 14,158 | 32,629 | ||||||||||||||||||||||
| Convertible note conversions | (123) | (7,034) | ||||||||||||||||||||||
| Exercises of convertible note hedges | 1 | 143,898 | ||||||||||||||||||||||
| Other adjustments | 0 | (5,016) | ||||||||||||||||||||||
| Ending Balance | 2,614,768 | 2,350,740 | 2,614,768 | 2,350,740 | ||||||||||||||||||||
| Retained Earnings | ||||||||||||||||||||||||
| Changes in Stockholders' Equity | ||||||||||||||||||||||||
| Beginning Balance | 1,820,124 | 1,530,239 | 1,619,688 | [6] | 1,357,837 | [6] | ||||||||||||||||||
| Net income | 94,450 | 101,609 | 294,494 | [6] | 274,011 | [6] | ||||||||||||||||||
| Convertible note conversions | 0 | |||||||||||||||||||||||
| Ending Balance | [6] | 1,914,574 | 1,631,848 | 1,914,574 | 1,631,848 | |||||||||||||||||||
| Cumulative Effect of New Accounting Principle in Period of Adoption | [6] | 392 | 392 | |||||||||||||||||||||
| Treasury Stock | ||||||||||||||||||||||||
| Changes in Stockholders' Equity | ||||||||||||||||||||||||
| Beginning Balance | (3,055,268) | (2,425,059) | (2,525,072) | (2,311,805) | ||||||||||||||||||||
| Common stock repurchase | (12,791) | (100,000) | (412,845) | (237,002) | ||||||||||||||||||||
| Re-issuance of treasury stock under employee stock purchase plan | 9,461 | 18,984 | 23,201 | 42,732 | ||||||||||||||||||||
| Convertible note conversions | 0 | 0 | ||||||||||||||||||||||
| Exercises of convertible note hedges | 0 | (143,882) | ||||||||||||||||||||||
| Ending Balance | (3,058,598) | (2,506,075) | (3,058,598) | (2,506,075) | ||||||||||||||||||||
| Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||
| Changes in Stockholders' Equity | ||||||||||||||||||||||||
| Beginning Balance | (51,636) | (33,176) | (32,596) | (88,352) | ||||||||||||||||||||
| Other comprehensive income (loss), net of tax | 4,499 | (2,719) | (14,541) | 52,457 | ||||||||||||||||||||
| Exercises of convertible note hedges | 0 | |||||||||||||||||||||||
| Ending Balance | $ (47,137) | $ (35,895) | $ (47,137) | $ (35,895) | ||||||||||||||||||||
| ||||||||||||||||||||||||
Stockholders' Equity - Additional Information (Detail) - USD ($) |
3 Months Ended | 5 Months Ended | 9 Months Ended | 24 Months Ended | ||||
|---|---|---|---|---|---|---|---|---|
Jun. 21, 2018 |
Jun. 22, 2016 |
Nov. 30, 2018 |
Nov. 30, 2017 |
Nov. 30, 2018 |
Nov. 30, 2018 |
Nov. 30, 2017 |
Jun. 30, 2018 |
|
| Shareholders Equity [Line Items] | ||||||||
| Aggregate cost of common stock repurchased | $ 12,791,000 | $ 100,000,000 | $ 412,845,000 | $ 237,002,000 | ||||
| June 2016 Share Repurchase Program | ||||||||
| Shareholders Equity [Line Items] | ||||||||
| Common stock amount authorized for stock repurchase program | $ 1,000,000,000.0 | |||||||
| Stock repurchase program termination date | Jun. 30, 2018 | |||||||
| Common stock, purchased during the period (in shares) | 8,167,871 | |||||||
| Aggregate cost of common stock repurchased | $ 751,300,000 | |||||||
| June 2018 Share Repurchase Program | ||||||||
| Shareholders Equity [Line Items] | ||||||||
| Common stock amount authorized for stock repurchase program | $ 1,000,000,000.0 | |||||||
| Stock repurchase program termination date | Jun. 30, 2020 | |||||||
| Common stock, purchased during the period (in shares) | 1,838,241 | |||||||
| Aggregate cost of common stock repurchased | $ 262,800,000 | |||||||
| Stock available for repurchase | 737,200,000 | $ 737,200,000 | 737,200,000 | |||||
| Additional Paid-In Capital | ||||||||
| Shareholders Equity [Line Items] | ||||||||
| Aggregate cost of common stock repurchased | $ 0 | $ 0 | ||||||
Stockholders' Equity - Summary of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Thousands |
Nov. 30, 2018 |
Feb. 28, 2018 |
|||
|---|---|---|---|---|---|
| Equity [Abstract] | |||||
| Accumulated loss from foreign currency translation adjustment | $ (44,245) | $ (29,679) | |||
| Accumulated unrealized loss, net of tax, on available-for-sale securities | (2,892) | (2,917) | |||
| Accumulated other comprehensive loss | $ (47,137) | $ (32,596) | [1] | ||
| |||||
Deferred Revenue and Performance Obligations - Summary of Deferred Revenue Activity (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2018 |
Aug. 31, 2018 |
May 31, 2018 |
Nov. 30, 2018 |
|||||||||
| Change in Contract with Customer, Liability [Roll Forward] | ||||||||||||
| Deferred revenue, short-term, beginning balance | [1] | $ 1,853,719 | $ 1,853,719 | |||||||||
| Deferred revenue, long-term, beginning balance | [1] | 741,453 | 741,453 | |||||||||
| Total deferred revenue, beginning balance | 2,595,172 | 2,595,172 | ||||||||||
| Revenue recognized from opening balance, noncurrent | [2] | 0 | ||||||||||
| Revenue recognized from opening balance | $ (365,800) | $ (538,000) | $ (611,400) | (1,515,184) | [2] | |||||||
| Deferred revenue net, short-term | [3] | 1,400,012 | ||||||||||
| Deferred revenue net, long-term | [3] | 49,124 | ||||||||||
| Deferred revenue net | [3] | 1,449,136 | ||||||||||
| Deferred revenue, short-term, ending balance | 1,738,547 | 1,738,547 | ||||||||||
| Deferred revenue, long-term, ending balance | 790,577 | 790,577 | ||||||||||
| Total deferred revenue, ending balance | $ 2,529,124 | $ 2,529,124 | ||||||||||
| ||||||||||||
Deferred Revenue and Performance Obligations - Narrative (Detail) - USD ($) $ in Thousands |
Nov. 30, 2018 |
Feb. 28, 2018 |
|---|---|---|
| Revenue from Contract with Customer [Abstract] | ||
| Total deferred revenue | $ 2,529,124 | $ 2,595,172 |
| Remaining performance obligation | 3,350,000 | |
| Amount of potential remaining performance obligation | 145,400 | |
| Backlog | $ 3,500,000 |
Deferred Revenue and Performance Obligations - Remaining Performance Obligation (Detail) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-12-01 |
Nov. 30, 2018 |
|---|---|
| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
| Remaining performance obligation, percentage | 60.00% |
| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months |
Earnings Per Share - Reconciliation of Numerators and Denominators of Earnings Per Share Calculation (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
[2] | Nov. 30, 2018 |
Nov. 30, 2017 |
[2] | |||||||||
| Earnings Per Share [Abstract] | ||||||||||||||
| Net income available to common stockholders | $ 94,450 | $ 101,609 | [1],[3],[4] | $ 294,494 | $ 274,011 | [1],[3],[4] | ||||||||
| Weighted average common shares outstanding (in shares) | 176,231 | 177,063 | [1] | 176,762 | 177,188 | [1] | ||||||||
| Incremental shares attributable to assumed vesting or exercise of outstanding equity award shares (in shares) | 2,726 | 3,518 | 3,380 | 3,281 | ||||||||||
| Dilutive effect of convertible notes (in shares) | 3,648 | 4,109 | 3,730 | 2,928 | ||||||||||
| Dilutive effect of warrants (in shares) | 3,457 | 1,470 | 3,629 | 0 | ||||||||||
| Diluted shares (in shares) | 186,062 | 186,160 | [1] | 187,501 | 183,397 | [1] | ||||||||
| Earnings Per Share, Diluted (in dollars per share) | $ 0.51 | $ 0.55 | [1] | $ 1.57 | $ 1.49 | [1] | ||||||||
| ||||||||||||||
Earnings Per Share - Additional Information (Detail) - $ / shares |
Nov. 30, 2018 |
Nov. 30, 2017 |
Oct. 01, 2014 |
|---|---|---|---|
| Earnings Per Share [Abstract] | |||
| Warrants outstanding (in shares) | 10,965,630 | 10,965,630 | |
| Exercise price per share (in dollars per share) | $ 101.65 | $ 101.65 | $ 101.65 |
Earnings Per Share - Shares Considered Anti-Dilutive for Calculating Diluted EPS (Detail) - shares shares in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Nov. 30, 2018 |
Nov. 30, 2017 |
|
| Stock Options | ||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
| Number of shares considered anti-dilutive for calculating diluted EPS (in shares) | 0 | 353 | 0 | 117 |
Share-based Awards - Additional Information (Detail) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Nov. 30, 2018 |
Nov. 30, 2017 |
|
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
| Fair value assumptions, method used | Black-Scholes-Merton | |||
| Share-based compensation expense capitalized | $ 0 | $ 0 | $ 0 | $ 0 |
Share-based Awards - Share-Based Compensation Expense (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Nov. 30, 2018 |
Nov. 30, 2017 |
|||||||
| Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||||||||
| Total share-based compensation expense (1) | [1] | $ 56,278 | $ 52,318 | [2] | $ 154,969 | $ 142,983 | [2] | |||
| Cost of revenue | ||||||||||
| Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||||||||
| Total share-based compensation expense (1) | 4,803 | 4,199 | 14,678 | 12,408 | ||||||
| Sales and marketing | ||||||||||
| Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||||||||
| Total share-based compensation expense (1) | 25,218 | 23,278 | 67,562 | 64,708 | ||||||
| Research and development | ||||||||||
| Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||||||||
| Total share-based compensation expense (1) | 17,003 | 14,937 | 48,091 | 42,603 | ||||||
| General and administrative | ||||||||||
| Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||||||||
| Total share-based compensation expense (1) | 9,254 | 9,904 | 24,638 | 23,264 | ||||||
| Employee Stock Purchase Plan | ||||||||||
| Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||||||||
| Total share-based compensation expense (1) | $ 4,200 | $ 2,900 | $ 12,000 | $ 8,800 | ||||||
| ||||||||||
Share-based Awards - Summary of Share-Based Awards Granted During Period (Detail) - $ / shares |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Nov. 30, 2018 |
Nov. 30, 2017 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Shares and Shares Underlying Awards (in shares) | 1,857,095 | 1,952,026 | ||
| Weighted Average Per Share Award Fair Value (in dollars per share) | $ 144.08 | $ 99.25 | ||
| Service-based shares and share units | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Shares and Shares Underlying Awards (in shares) | 856,895 | 699,066 | 1,619,862 | 1,585,904 |
| Weighted Average Per Share Award Fair Value (in dollars per share) | $ 125.61 | $ 120.89 | $ 141.23 | $ 101.85 |
| Performance share units—target | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Shares and Shares Underlying Awards (in shares) | 173,014 | 261,760 | ||
| Weighted Average Per Share Award Fair Value (in dollars per share) | $ 163.56 | $ 87.99 | ||
| Targeted percentage of performance share units earned by executive | 200.00% | |||
| Performance share awards | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Shares and Shares Underlying Awards (in shares) | 64,219 | 104,362 | ||
| Weighted Average Per Share Award Fair Value (in dollars per share) | $ 163.56 | $ 87.99 | ||
| Vesting right description | These shares were awarded subject to the achievement of a specified dollar amount of revenue for the fiscal year ending February 28, 2018 (the ?RSA Performance Goal?). If the Company fails to achieve the RSA Performance Goal for the fiscal year ending February 28, 2018, then all such shares are forfeited. If the Company achieves the RSA Performance Goal for the fiscal year ending February 28, 2018, then 25% of the restricted stock vests on or about July 16, 2018, and the remainder vests ratably on a quarterly basis over the course of the subsequent three-year period, provided that the grantee?s business relationship with the Company has not ceased. | |||
| Vesting period | 3 years | |||
| Percentage vested after one year if performance conditions achieved | 25.00% | |||
| Share-based Compensation Award, Tranche One | Performance share units—target | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Vesting right description | Half of the target number of PSUs can be earned by the grantees depending upon the Company?s financial performance measured against the financial performance of specified peer companies during a three-year performance period beginning on March 1, 2018. | |||
| Vesting period | 3 years | |||
| Share-based Compensation Award, Tranche Two | Performance share units—target | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Vesting right description | The remaining target number of PSUs can be earned by the grantees depending upon the Company?s total stockholder return performance measured against the total stockholder return performance of specified peer companies during a three-year period beginning on March 1, 2018. | |||
| Vesting period | 3 years | |||
Assets and Liabilities Measured at Fair Value on a Recurring Basis - Summary of Financial Assets and Liabilities Measured at Fair Value (Detail) - USD ($) $ in Thousands |
Nov. 30, 2018 |
Feb. 28, 2018 |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Assets: | ||||||||||
| Money markets | $ 456,111 | $ 334,665 | [1] | |||||||
| Interest-bearing deposits | 56,954 | 61,125 | [1] | |||||||
| Available-for-sale securities, debt securities | 626,801 | |||||||||
| Available-for-sale, equity securities | [1] | 1,166 | ||||||||
| Foreign currency derivatives | 154 | 298 | [2] | |||||||
| Liabilities: | ||||||||||
| Foreign currency derivatives | (152) | (312) | [3] | |||||||
| Total | 1,482,344 | 1,701,766 | ||||||||
| Cash | 740,700 | 771,200 | ||||||||
| Level 1 | ||||||||||
| Assets: | ||||||||||
| Money markets | 456,111 | 334,665 | [1] | |||||||
| Interest-bearing deposits | 0 | 0 | [1] | |||||||
| Available-for-sale, equity securities | [1] | 1,166 | ||||||||
| Foreign currency derivatives | 0 | 0 | [2] | |||||||
| Liabilities: | ||||||||||
| Foreign currency derivatives | 0 | 0 | [3] | |||||||
| Total | 456,111 | 335,831 | ||||||||
| Level 2 | ||||||||||
| Assets: | ||||||||||
| Money markets | 0 | 0 | [1] | |||||||
| Interest-bearing deposits | 56,954 | 61,125 | [1] | |||||||
| Available-for-sale, equity securities | [1] | 0 | ||||||||
| Foreign currency derivatives | 154 | 298 | [2] | |||||||
| Liabilities: | ||||||||||
| Foreign currency derivatives | (152) | (312) | [3] | |||||||
| Total | 1,026,233 | 1,365,935 | ||||||||
| Level 3 | ||||||||||
| Assets: | ||||||||||
| Money markets | 0 | 0 | [1] | |||||||
| Interest-bearing deposits | 0 | 0 | [1] | |||||||
| Available-for-sale, equity securities | [1] | 0 | ||||||||
| Foreign currency derivatives | 0 | 0 | [2] | |||||||
| Liabilities: | ||||||||||
| Foreign currency derivatives | 0 | 0 | [3] | |||||||
| Total | 0 | 0 | ||||||||
| Commercial paper | ||||||||||
| Assets: | ||||||||||
| Available-for-sale securities, debt securities | 442,596 | 615,043 | [1] | |||||||
| Commercial paper | Level 1 | ||||||||||
| Assets: | ||||||||||
| Available-for-sale securities, debt securities | 0 | 0 | [1] | |||||||
| Commercial paper | Level 2 | ||||||||||
| Assets: | ||||||||||
| Available-for-sale securities, debt securities | 442,596 | 615,043 | [1] | |||||||
| Commercial paper | Level 3 | ||||||||||
| Assets: | ||||||||||
| Available-for-sale securities, debt securities | 0 | 0 | [1] | |||||||
| U.S. agency securities | ||||||||||
| Assets: | ||||||||||
| Available-for-sale securities, debt securities | 235,739 | 308,267 | [1] | |||||||
| U.S. agency securities | Level 1 | ||||||||||
| Assets: | ||||||||||
| Available-for-sale securities, debt securities | 0 | 0 | [1] | |||||||
| U.S. agency securities | Level 2 | ||||||||||
| Assets: | ||||||||||
| Available-for-sale securities, debt securities | 235,739 | 308,267 | [1] | |||||||
| U.S. agency securities | Level 3 | ||||||||||
| Assets: | ||||||||||
| Available-for-sale securities, debt securities | 0 | 0 | [1] | |||||||
| Corporate securities | ||||||||||
| Assets: | ||||||||||
| Available-for-sale securities, debt securities | 290,942 | 381,514 | [1] | |||||||
| Corporate securities | Level 1 | ||||||||||
| Assets: | ||||||||||
| Available-for-sale securities, debt securities | 0 | 0 | [1] | |||||||
| Corporate securities | Level 2 | ||||||||||
| Assets: | ||||||||||
| Available-for-sale securities, debt securities | 290,942 | 381,514 | [1] | |||||||
| Corporate securities | Level 3 | ||||||||||
| Assets: | ||||||||||
| Available-for-sale securities, debt securities | $ 0 | $ 0 | [1] | |||||||
| ||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis - Investments Measured at Fair Value (Detail) - USD ($) $ in Thousands |
Nov. 30, 2018 |
Feb. 28, 2018 |
||||||
|---|---|---|---|---|---|---|---|---|
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Gross Unrealized Gains | $ 244 | |||||||
| Gross Unrealized Losses | [1] | (4,919) | ||||||
| Available-for-sale securities, debt securities | 626,801 | |||||||
| Cash, cash equivalents and available-for-sale securities amortized cost | 1,487,017 | $ 1,706,517 | ||||||
| Gross Unrealized Gains | 1,212 | |||||||
| Gross Unrealized Losses | (5,949) | |||||||
| Equity Securities, FV-NI | 650 | |||||||
| Cash, cash equivalents and available-for-sale securities | 1,482,342 | 1,701,780 | ||||||
| Available-for-sale equity securities, gross unrealized gain, before tax | 516 | |||||||
| Available-for-sale equity securities, gross unrealized loss, before tax | 0 | |||||||
| Available-for-sale securities, equity securities | [2] | 1,166 | ||||||
| Accumulated unrealized losses related to investments in unrealized loss position 12 months or longer | 4,400 | |||||||
| Fair value of investments with unrealized losses | 515,400 | |||||||
| Accumulated unrealized losses related to investments in unrealized loss position 12 months or longer | 4,600 | |||||||
| Fair value of investments with unrealized losses | 436,200 | |||||||
| Cash Equivalent Marketable Securities | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Cash equivalent marketable securities | 798,587 | 952,980 | ||||||
| Investments in debt and equity securities, short-term | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Available-for-sale securities, debt securities | 387,885 | |||||||
| Available-for-sale securities | 318,358 | |||||||
| Available-for-sale securities, equity securities | 1,166 | |||||||
| Investments in debt securities, long-term | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Available-for-sale securities, debt securities | 295,870 | |||||||
| Available-for-sale securities | 430,442 | |||||||
| Available-for-sale securities, equity securities | 0 | |||||||
| Money markets | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Cash, cash equivalents and restricted cash | 456,111 | 334,665 | ||||||
| Cash and cash equivalents, fair value disclosure | 456,111 | 334,665 | ||||||
| Money markets | Cash Equivalent Marketable Securities | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Cash, cash equivalents and restricted cash | 456,111 | 334,665 | ||||||
| Commercial paper | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Cash, cash equivalents and restricted cash | 442,596 | 615,043 | ||||||
| Cash and cash equivalents, fair value disclosure | 442,596 | 615,043 | ||||||
| Commercial paper | Cash Equivalent Marketable Securities | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Cash, cash equivalents and restricted cash | 342,476 | 615,043 | ||||||
| Commercial paper | Investments in debt and equity securities, short-term | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Cash, cash equivalents and restricted cash | 100,120 | |||||||
| Commercial paper | Investments in debt securities, long-term | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Cash, cash equivalents and restricted cash | 0 | |||||||
| Corporate securities | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Available-for-sale debt securities, amortized cost | 292,164 | 382,497 | ||||||
| Gross Unrealized Gains | 244 | 696 | ||||||
| Gross Unrealized Losses | (1,466) | [1] | (1,679) | |||||
| Available-for-sale securities, debt securities | 290,942 | 381,514 | ||||||
| Corporate securities | Cash Equivalent Marketable Securities | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Available-for-sale securities, debt securities | 3,272 | |||||||
| Corporate securities | Investments in debt and equity securities, short-term | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Available-for-sale securities, debt securities | 155,965 | 162,892 | ||||||
| Corporate securities | Investments in debt securities, long-term | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Available-for-sale securities, debt securities | 134,977 | 215,350 | ||||||
| Interest-bearing deposits | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Available-for-sale debt securities, amortized cost | 56,954 | 61,125 | ||||||
| Gross Unrealized Gains | 0 | |||||||
| Gross Unrealized Losses | 0 | |||||||
| Available-for-sale securities, debt securities | 56,954 | 61,125 | ||||||
| Interest-bearing deposits | Investments in debt and equity securities, short-term | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Available-for-sale securities, debt securities | 56,954 | 61,125 | ||||||
| Interest-bearing deposits | Investments in debt securities, long-term | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Available-for-sale debt securities, amortized cost | 0 | |||||||
| U.S. agency securities | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Available-for-sale debt securities, amortized cost | 239,192 | 312,537 | ||||||
| Gross Unrealized Gains | 0 | 0 | ||||||
| Gross Unrealized Losses | (3,453) | [1] | (4,270) | |||||
| Available-for-sale securities, debt securities | 235,739 | 308,267 | ||||||
| U.S. agency securities | Investments in debt and equity securities, short-term | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Available-for-sale securities, debt securities | 74,846 | 93,175 | ||||||
| U.S. agency securities | Investments in debt securities, long-term | ||||||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||
| Available-for-sale securities, debt securities | $ 160,893 | $ 215,092 | ||||||
| ||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis - Summary of Stated Maturities of Investment in Debt Securities (Detail) $ in Thousands |
Nov. 30, 2018
USD ($)
|
|---|---|
| Fair Value Disclosures [Abstract] | |
| November 30, 2018 | $ 626,801 |
| Less than 1 Year | 330,931 |
| 1-5 Years | 295,870 |
| More than 5 Years | $ 0 |
Segment Reporting - Additional Information (Detail) - segment |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Nov. 30, 2018 |
Nov. 30, 2017 |
|
| Segment Reporting Information [Line Items] | ||||
| Number of operating segments | 3 | |||
| Number of reportable segments | 1 | |||
| U.S. Government and Agencies | Subscription Revenues | Customer Concentration Risk | ||||
| Segment Reporting Information [Line Items] | ||||
| Concentration risk, percentage | 11.00% | 10.00% | 10.00% | 11.00% |
Segment Reporting - Summary of Revenue, Income (Loss) from Operations, Total Assets and Total Cash, Cash Equivalents and Available-for-Sale Investment Securities by Geographic Segments (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Nov. 30, 2018 |
Nov. 30, 2017 |
Feb. 28, 2018 |
[3] | ||||||||||||
| Segment Reporting Information [Line Items] | |||||||||||||||||
| Total revenue from unaffiliated customers | $ 846,795 | $ 747,978 | [1] | $ 2,483,072 | $ 2,148,129 | [1] | |||||||||||
| Income (loss) from operations | 108,958 | 118,718 | [1],[2] | 355,670 | 343,252 | [1],[2] | |||||||||||
| Total cash, cash equivalents, restricted cash and available-for-sale investment securities | 2,223,027 | 2,321,173 | 2,223,027 | 2,321,173 | |||||||||||||
| Total assets | 5,103,014 | 4,767,033 | [2] | 5,103,014 | 4,767,033 | [2] | $ 5,474,493 | ||||||||||
| Corporate | |||||||||||||||||
| Segment Reporting Information [Line Items] | |||||||||||||||||
| Total revenue from unaffiliated customers | [4] | 0 | 0 | 0 | 0 | ||||||||||||
| Income (loss) from operations | [4] | (56,278) | (52,318) | [2] | (154,969) | (142,983) | [2] | ||||||||||
| Total cash, cash equivalents, restricted cash and available-for-sale investment securities | [4] | 0 | 0 | 0 | 0 | ||||||||||||
| Total assets | [4] | 0 | 0 | [2] | 0 | 0 | [2] | ||||||||||
| Americas | Operating Segment | |||||||||||||||||
| Segment Reporting Information [Line Items] | |||||||||||||||||
| Total revenue from unaffiliated customers | 527,367 | 471,773 | 1,541,996 | 1,373,512 | |||||||||||||
| Income (loss) from operations | 83,304 | 99,924 | [2] | 254,364 | 284,824 | [2] | |||||||||||
| Total cash, cash equivalents, restricted cash and available-for-sale investment securities | 1,181,093 | 1,071,638 | 1,181,093 | 1,071,638 | |||||||||||||
| Total assets | 3,342,003 | 2,878,717 | [2] | 3,342,003 | 2,878,717 | [2] | |||||||||||
| EMEA | Operating Segment | |||||||||||||||||
| Segment Reporting Information [Line Items] | |||||||||||||||||
| Total revenue from unaffiliated customers | 198,730 | 173,718 | 583,181 | 477,110 | |||||||||||||
| Income (loss) from operations | 45,252 | 42,404 | [2] | 145,888 | 114,410 | [2] | |||||||||||
| Total cash, cash equivalents, restricted cash and available-for-sale investment securities | 572,629 | 855,164 | 572,629 | 855,164 | |||||||||||||
| Total assets | 1,111,572 | 1,312,089 | [2] | 1,111,572 | 1,312,089 | [2] | |||||||||||
| Asia Pacific | Operating Segment | |||||||||||||||||
| Segment Reporting Information [Line Items] | |||||||||||||||||
| Total revenue from unaffiliated customers | 120,698 | 102,487 | 357,895 | 297,507 | |||||||||||||
| Income (loss) from operations | 36,680 | 28,708 | [2] | 110,387 | 87,001 | [2] | |||||||||||
| Total cash, cash equivalents, restricted cash and available-for-sale investment securities | 469,305 | 394,371 | 469,305 | 394,371 | |||||||||||||
| Total assets | $ 649,439 | $ 576,227 | [2] | $ 649,439 | $ 576,227 | [2] | |||||||||||
| |||||||||||||||||
Segment Reporting - Summary of Revenue from Unaffiliated Customers (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Nov. 30, 2018 |
Nov. 30, 2017 |
|||||
| Segment Reporting Information [Line Items] | ||||||||
| Total revenue from unaffiliated customers | $ 846,795 | $ 747,978 | [1] | $ 2,483,072 | $ 2,148,129 | [1] | ||
| U.S., the Company’s country of domicile | ||||||||
| Segment Reporting Information [Line Items] | ||||||||
| Total revenue from unaffiliated customers | 473,201 | 415,900 | 1,367,596 | 1,227,645 | ||||
| Foreign | ||||||||
| Segment Reporting Information [Line Items] | ||||||||
| Total revenue from unaffiliated customers | $ 373,594 | $ 332,078 | $ 1,115,476 | $ 920,484 | ||||
| ||||||||
Segment Reporting - Summary of Tangible Long-Lived Assets (Detail) - USD ($) $ in Thousands |
Nov. 30, 2018 |
Feb. 28, 2018 |
|||
|---|---|---|---|---|---|
| Segment Reporting, Asset Reconciling Item [Line Items] | |||||
| Total tangible long-lived assets | $ 195,249 | $ 206,105 | [1] | ||
| U.S., the Company’s country of domicile | |||||
| Segment Reporting, Asset Reconciling Item [Line Items] | |||||
| Total tangible long-lived assets | 128,996 | 137,112 | |||
| Foreign | |||||
| Segment Reporting, Asset Reconciling Item [Line Items] | |||||
| Total tangible long-lived assets | $ 66,253 | $ 68,993 | |||
| |||||
Segment Reporting - Summary of Subscription and Services Revenue by Technology Product (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Nov. 30, 2018 |
Nov. 30, 2017 |
|||||
| Revenue from External Customer [Line Items] | ||||||||
| Total revenue | $ 846,795 | $ 747,978 | [1] | $ 2,483,072 | $ 2,148,129 | [1] | ||
| Subscriptions | ||||||||
| Revenue from External Customer [Line Items] | ||||||||
| Total revenue | 740,661 | 656,832 | [1] | 2,174,881 | 1,890,902 | [1] | ||
| Infrastructure-related offerings | ||||||||
| Revenue from External Customer [Line Items] | ||||||||
| Total revenue | 534,051 | 494,974 | 1,583,154 | 1,440,383 | ||||
| Application Development-related and other emerging technology offerings | ||||||||
| Revenue from External Customer [Line Items] | ||||||||
| Total revenue | 206,610 | 161,858 | 591,727 | 450,519 | ||||
| Training and services | ||||||||
| Revenue from External Customer [Line Items] | ||||||||
| Total revenue | 106,134 | 91,146 | [1] | 308,191 | 257,227 | [1] | ||
| Consulting services | ||||||||
| Revenue from External Customer [Line Items] | ||||||||
| Total revenue | 81,070 | 69,499 | 237,602 | 196,161 | ||||
| Training | ||||||||
| Revenue from External Customer [Line Items] | ||||||||
| Total revenue | $ 25,064 | $ 21,647 | $ 70,589 | $ 61,066 | ||||
| ||||||||
Business Combinations - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Nov. 27, 2018 |
Jan. 30, 2018 |
Jul. 31, 2017 |
Jun. 01, 2017 |
Nov. 30, 2018 |
Nov. 30, 2018 |
|
| Business Acquisition [Line Items] | ||||||
| Goodwill acquired | $ 11,550 | |||||
| NoobaLtd. | ||||||
| Business Acquisition [Line Items] | ||||||
| Cash paid | $ 11,600 | |||||
| Goodwill acquired | 12,000 | |||||
| Net working capital | $ (400) | |||||
| Acquisition Related Costs | $ 100 | $ 100 | ||||
| CoreOS, Inc. | ||||||
| Business Acquisition [Line Items] | ||||||
| Cash paid | $ 238,700 | |||||
| Goodwill acquired | 159,700 | |||||
| Identifiable intangible assets acquired | 81,700 | |||||
| Net working capital | $ (2,700) | |||||
| Permabit Technology Corporation | ||||||
| Business Acquisition [Line Items] | ||||||
| Cash paid | $ 49,800 | |||||
| Goodwill acquired | 39,400 | |||||
| Identifiable intangible assets acquired | $ 10,400 | |||||
| Codenvy S. A. | ||||||
| Business Acquisition [Line Items] | ||||||
| Cash paid | $ 34,200 | |||||
| Goodwill acquired | 25,400 | |||||
| Identifiable intangible assets acquired | 11,300 | |||||
| Net working capital | $ (2,500) |
Business Combinations - Summary of Pro Forma Information (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended |
|---|---|---|
Nov. 30, 2017 |
Nov. 30, 2017 |
|
| Business Combinations [Abstract] | ||
| Revenue | $ 750,631 | $ 2,155,995 |
| Net income | $ 94,915 | $ 250,402 |
| Basic net income per common share (in dollars per share) | $ 0.54 | $ 1.41 |
| Diluted net income per common share (in dollars per share) | $ 0.51 | $ 1.37 |
Business Combinations - Summary of Changes in Goodwill (Detail) $ in Thousands |
9 Months Ended | |||
|---|---|---|---|---|
|
Nov. 30, 2018
USD ($)
| ||||
| Goodwill [Roll Forward] | ||||
| Goodwill, beginning balance | $ 1,288,830 | [1] | ||
| Acquisitions | 11,550 | |||
| Impact of foreign currency fluctuations | (11,803) | |||
| Other adjustments | (3,074) | |||
| Goodwill, ending balance | $ 1,285,503 | |||
| ||||
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